Current Realities and Future
Possibilities in Burma/Myanmar:
Options For U.S. Policy
Asia Society Task Force ReportCurrent Realities and Future
Possibilities in Burma/Myanmar:
Options For U.S. Policy
Asia Society Task Force Report
March 2010

Task Force on U.S. Policy toward Burma/
Myanmar
Co-Chairs
Wesley K. Clark, U.S. Army (Ret.) General; Chairman and CEO, Wesley K. Clark andAssociates; Senior Fellow, UCLA Burkle Center for International Relations
Henrietta H. Fore, Chairman and CEO, Holsman International; Former Administrator,
U.S. Agency for International Development (USAID); Former Director of U.S. Foreign
Assistance

Project Director
Suzanne DiMaggio, Director of Policy Studies, Asia Society

Principal Advisors
Priscilla Clapp, Former Chief of Mission, U.S. Embassy in Burma
Sean Turnell, Associate Professor of Economics, Macquarie University, Australia

Project Manager
Robert W. Hsu, Senior Program Officer, Policy Studies, Asia Society

Members
Donald Emmerson, Director, Southeast Asia Forum, Shorenstein Asia-Pacific ResearchCenter, Stanford University
George Packer, Writer, The New Yorker
Thomas Pickering, Vice Chairman, Hills and Company; Former U.S. Undersecretary ofState for Political Affairs
Paulo Sergio Pinheiro, Former UN Special Rapporteur on the Situation of Human
Rights in Myanmar
Kenneth Roth, Executive Director, Human Rights Watch
James Scott, Sterling Professor of Political Science and Anthropology, Yale University
Amartya Sen, Thomas W. Lamont University Professor and Professor of Economics andPhilosophy, Harvard University; Nobel Laureate in Economics
George Soros, Chairman, Soros Fund Management and Open Society Institute
Richard Williamson, Former U.S. Special Envoy to Sudan; Former U.S. Ambassador to
the United Nations

Advisory Group
Maureen Aung-Thwin
Director, Burma Project/Southeast Asia Initiative, Open Society Institute
Mohamed Jawhar Hassan
Chairman and CEO, Institute of Strategic and International Studies, Malaysia
Carolina HernandezFounding President, Institute for Strategic and Development Studies, Philippines
Rajiv Kumar
Director and Chief Executive, Indian Council for Research on International Economic
Relations
Jamie Metzl
Executive Vice President, Asia Society
Michael Mitchell
Consultant, Orion Strategies
Mya ThanEconomist, Institute of Strategic and International Studies, Thailand
Yoshiji Nogami
President, Japan Institute of International Affairs
Elaine Pearson
Deputy Director, Asia Division, Human Rights Watch
Thitinan Pongsudhirak
Director, Institute of Security and International Studies, Thailand
Josef Silverstein
Professor Emeritus, Rutgers University
David Steinberg
Distinguished Professor, Georgetown University
Rizal Sukma
Executive Director, Centre for Strategic and International Studies, Indonesia
Simon Tay
Chairman, Singapore Institute of International Affairs

Thaung Htun
UN Representative, National Coalition Government of the Union of Burma
Tin Maung Maung Than
Senior Fellow and Coordinator, Institute of Southeast Asian Studies, Singapore
Alex Wagner
Executive Director, Not On Our Watch
Zhai Kun
Director of Division for Southeast Asian and Oceanian Studies, China Institutes ofContemporary International Relations
Frances Zwenig
Counselor, U.S.-ASEAN Business Council
Additional individuals from Burma participated anonymouslyTable of Contents
Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  6
Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  8
Current Realities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
The Context of Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Political Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Socioeconomic Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
		 Cyclone Nargis and the Drought of Rural Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
		 External Economic Relations and Burma’s Natural Resources. . . . . . . . . . . . . . . . . . 27
Future Possibilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Calibrating Engagement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
		 Expanding Channels of Communication. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
		 Operating in an Unhealthy Assistance Environment. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
		 Focusing Assistance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
		 Refugee and Cross-Border Aid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
		 Encouraging Economic Reform. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
		 Microfinance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Economic Sanctions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
International Collaboration and Coordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Conclusion: U.S. Policy Options Based on Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Appendices
Appendix A: A Mechanism for Assessing and		 Appropriately Adjusting Economic Sanctions on Burma . . . . . . . . . . . . . . . . . . . . . . . 52
Appendix B: The Current Trajectory:
		 2010 Elections and the Economics of the Constitution. . . . . . . . . . . . . . . . . . . . . . . . . 55
Appendix C: U.S. Sanctions on Burma. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Map of Burma/Myanmar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Biographies of Task Force Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
5

Foreword
In September 2009, Barack Obama’s administration announced a new U.S. policy
direction for relations with Burma/Myanmar. This new course moves the UnitedStates away from previous efforts to isolate Burma’s military regime, seeking to balance
economic sanctions with “pragmatic engagement,” initiating efforts to expand channels ofcommunication with the military leadership at higher levels of authority, and taking gradualconfidence-building steps to foster cooperation and better understanding. Economic
sanctions will remain in place until military leaders release political prisoners, including
Aung San Suu Kyi, and take steps to promote genuine tripartite dialogue. The new direction
suggests that the United States will seek greater collaboration and cooperation with key
regional and international players to advance its Burma strategy, as demonstrated during
President Obama’s trip to Asia in November 2009.
Against this backdrop, the Asia Society established a Task Force on U.S. Policy toward
Burma/Myanmar to address the opportunities and challenges that lie ahead. The Task Forceagrees with and applauds the administration’s new direction, but recognizes that it is only abroad outline for a new way forward in U.S.–Burma relations; much remains to be defined.
From this vantage point, this report lays out the background and conditions that influenced
the U.S. policy decision and presents a set of recommendations for how U.S. policy might
be developed going forward. The Asia Society Task Force aims to make a contribution to
the continuing review and development of U.S. policy toward Burma in the near and longer
term. By tying improvements in the bilateral relationship to concrete actions on the part ofthe Burmese leadership, the report elaborates how elements of the policy recommendations
contained herein might play out according to both negative and positive developments.
The Task Force has chosen to devote more space to economic conditions in Burmaand approaches to improving them than past Burma-related reports because this issue
bears directly on the debate about economic sanctions, which are often misunderstood or
misrepresented by both sides. Detailed economic background and analyses are included
to provide insight into the rationale behind the recommendations, particularly the Task
Force’s proposal that the U.S. government take a calibrated approach to the removal of
current economic sanctions, adjusting these decisions to improvements in economic policy
and political reform. Moreover, a more detailed exploration of economic issues reveals theintricate relationship between a population’s economic welfare and individual rights andfreedoms—in other words, the human rights side of the equation.
The report also examines questions surrounding the upcoming national elections in
Burma, which are scheduled to be held sometime in 2010, and, over time, the potential
reestablishment of parliamentary government in Burma. How these developments unfold
will be a major consideration in calculating adjustments to U.S. policy over the next five
years or more. Specifically, the Task Force believes that the United States must position
itself to respond effectively and flexibly, with a variety of tools, to the twists and turns thata potential transition may take over time, with an eye toward encouraging the Burmese
6leadership to move in positive directions. We recognize that this is the general thinking
behind the new U.S. approach.
Much of the information in this report was drawn from the contributions of our Task
Force members and advisors, Burmese sources inside and outside the country, other experts,
and the myriad published reports that have been produced outside Burma.
Given that an international consensus has yet to emerge regarding approaches to
Burma, the Asia Society thought it would be useful to partner with institutions across the
Asia-Pacific region to review the current state of play and to offer recommendations fromtheir unique national perspectives. To this end, the Society sponsored a series of national
dialogues that were carried out by the following institutes: Macquarie University, Australia;
the Indian Council for Research on International Economic Relations; the Centre forStrategic and International Studies, Indonesia; the Japan Institute of International Affairs;
the Institute of Strategic and International Studies, Malaysia; the Institute for Strategic andDevelopment Studies, Philippines; the Singapore Institute of International Affairs; and theInstitute of Security and International Studies, Thailand. In addition to these institutional
contributions, a review of Chinese policy was conducted by experts and scholars in China
working in their individual capacities.
All of the reports resulting from these dialogues as well as the U.S. Task Force’s report
are available at AsiaSociety.org/BurmaMyanmarReport.
On behalf of the Asia Society, I wish to thank the Task Force’s eminent co-chairs, Wesley
K. Clark and Henrietta H. Fore, who contributed their depth of experience and determinedcommitment to this project. The Society is also indebted to the members of the Task Force,a group of prominent experts and leaders whose insights were indispensable. The Task Forcehas benefited tremendously from the intellectual guidance, advice, and constructive criticism
provided by the members of the project’s Advisory Group. We are grateful to all of them. In
particular, we extend our appreciation to our principal advisors—Priscilla Clapp and Sean
Turnell—for devoting their knowledge, insight, and time to this endeavor.
I also wish to thank Suzanne DiMaggio, Director of Policy Studies at the Asia Society,for capably and knowledgeably directing this project. Her leadership, dedication, andintellectual energy brought this effort to fruition. Special thanks also go to project manager
Robert W. Hsu for skillfully coordinating the many moving parts of this endeavor.
Finally, I would like to extend our gratitude to the Open Society Institute and to Asia
Society Trustee Leon Black for their generous financial support, which made the project
possible.
It is our hope that the views, ideas, and policy recommendations presented in thesereports will provide valuable insights to the governments of the United States, Asia, andbeyond, international and regional organizations, nongovernmental organizations, and all
who are interested in improving conditions in Burma.
Vishakha N. Desai
President, Asia Society

7

Executive Summary
In September 2009, the United States announced a new course in its policy toward
Burma following a seven-month review undertaken by the Barack Obama administration.1
Recognizing that decades of pursuing policies of isolation and sanctions had done little toinfluence change among Burma’s military leaders, the United States introduced a policyof “pragmatic engagement.” Under this new policy, the United States will maintain its
sanctions on Burma while simultaneously undertaking direct dialogue with senior leadersof the Burmese regime. Dialogue, according to the United States, will “supplement, rather
than replace,” decades of U.S. sanctions policy. These talks have already begun, and theUnited States has indicated that any improvement in relations between the two countries ispossible only when Burma’s military regime enacts meaningful and concrete reforms in the
country, particularly in the areas of democracy and human rights.2
In adjusting its policy toward Burma, the United States must face reality with clear
vision. Among other things, this vision must recognize that the United States’ ability tosolve Burma’s problems and to influence the course of the country’s governance is extremely
limited, as nearly 20 years experience with a harsh punitive policy of isolation and sanctions
have demonstrated. U.S. influence in Burma is unlikely to outweigh that of increasingly
powerful Asian neighbors. Therefore, the United States’ priority must be to clarify its
fundamental objectives in Burma and the basic means at its disposal for promoting thoseobjectives. Moreover, Burma is not likely to rank very high on the list of U.S. foreign policy
priorities in the foreseeable future, so resources to address U.S. goals in Burma will belimited, compared to priority countries and regions.
The Task Force believes that the United States must approach policy adjustmentswith careful consideration of how the instruments that are available—including both theengagement and sanctions sides of the equation—can be employed most effectively to
encourage reform and democratic governance. Through its programs and support for the
Burmese people, the United States can demonstrate that it is steady but flexible and quick
to react to any potential overtures from the Burmese government. Specifically, during thisperiod of transition, the United States should encourage the process of political development
toward democratic norms; press the military regime to improve governance; and assist thecountry’s non-Burman nationalities in pursuing an equitable voice in national governance.
The basic means available to the United States to pursue these goals will be effective
channels of communication; focused assistance programs; reform-oriented economic
activity; coordination with Burma’s neighbors and the broader international community;
The Asia Society Task Force on U.S. Policy toward Burma/Myanmar uses the name Burma, instead of Myanmar,
throughout this report, as this is consistent with the designation used by the U.S. government.
2
The core issues on the U.S. agenda include “the unconditional release of all political prisoners, including Aung San
Suu Kyi; an end to conflicts with minority groups; and a genuine dialogue between the government, the democratic
opposition and minority groups on a shared vision for the future.” See “Remarks by President Barack Obama at Suntory
Hall,” Tokyo, Japan, November 14, 2009, http://www.whitehouse.gov/the-press-office/remarks-president-barack-obamasuntory-hall (accessed February, 11, 2010).
1

8

and tightening of targeted financial sanctions, if and when necessary.
Going forward, it will be useful to consider distinctions based on change in
Burma for framing U.S. policy recommendations. The Task Force makes the following
recommendations, which are organized into three distinct stages: (1) measures to be
pursued now; (2) additional measures to be implemented if and when the United States
begins to see indications of change on the part of the Burmese leadership; and (3) actions
to be undertaken after real progress has been demonstrated on a sustained basis.
Stage 1: Measures to be pursued now
At present, there is no concrete evidence to suggest that Burma’s leaders will respondpositively to the central U.S. message on engaging in tripartite dialogue, releasing politicalprisoners, and allowing fair and inclusive elections. In fact, it is quite possible that theleadership’s primary objective in engaging with the United States is to demonstrate to its
own population that the United States endorses the regime’s seven-step process toward
democracy. The United States must tread carefully through this minefield, avoiding theappearance of sanctioning or legitimizing a flawed election process, while pressing Burma’s
military leaders to carry out credible elections.
The Task Force recommends that the following measures be carried out now to help
bring about and support potential change:• The United States should position itself to engage not only with Burma’s
military leaders, but also with a wide range of groups inside Burma. The
National League for Democracy should continue to be a focal point of U.S. policy
support, and its leader, Aung San Suu Kyi, will remain an important figure forachieving the dialogue necessary to bring about national reconciliation of themilitary, democracy groups, and minority nationalities. At the same time, U.S.
policy also must place greater emphasis on reaching out to other democratic forces,
including civil society groups, and ethnic minorities and ensuring that they benefit
from U.S. assistance programs inside Burma. In this connection, the Task Forcerecommends that the United States should encourage the UN Security Council
to implement the October 2007 Presidential Statement which calls for “a genuine
dialogue with Daw Aung San Suu Kyi and all concerned parties and ethnic groups
in order to achieve an inclusive national reconciliation.”3 Additionally, to facilitate
expanded engagement, the United States should appoint a Special Representativeand Policy Coordinator for Burma as called for by the Tom Lantos Block Burmese
Jade (Junta’s Anti-Democratic Efforts) Act of 2008 (JADE Act).4
UN Security Council, 5757th Meeting, “Statement by the President of the Security Council [The Situation in Myanmar],”(S/PRST/2007/37), October 11, 2007.
See Tom Lantos Block Burmese Jade (Junta’s Anti-Democratic Efforts) Act of 2008, Pub. L. no. 110-286, 122 Stat.
2642 (2008), http://www.gpo.gov/fdsys/pkg/PLAW-110publ286/pdf/PLAW-110publ286.pdf (accessed February 11,2010). In November 2008, U.S. President George W. Bush nominated Michael J. Green, a former White House advisor
on Asia, for this position. Green’s nomination never went before Congress for review and approval and no new nominees
have been presented since President Obama took office.

3

4

9

• U.S. policy toward Burma should emphasize coordination and collaboration
with other concerned governments and international institutions, particularly
Burma’s Asian neighbors. ASEAN, in particular, could be a valuable channel in the
coming decade for encouraging reforms in Burma. In this connection, the UnitedStates should work together with ASEAN countries to underscore the importance ofconducting the 2010 elections in “a free, fair, inclusive and transparent manner,” asoutlined in the joint statement from the first ASEAN-U.S. Leaders Summit held in
Singapore in November 2009. The United States also should develop collaborative
efforts with China, Japan, and India to press the Burmese government in positive
directions.
• U.S. sanctions on trade and investment with Burma should not be removed
until the government releases political prisoners, including Aung San Suu Kyi,
and allows full participation in the political process. The Task Force supports
the United States’ decision to maintain these sanctions in the absence of significant,meaningful change in the composition and policies of the Burmese government,
particularly with regard to its tolerance of political opposition. In addition,
sanctions on financial services related to corrupt practices, money laundering, andother measures used by the military leadership to exploit hard currency earnings
from the sale of natural resources should not be fully removed until major economic
reforms and anticorruption measures have been taken by a new government.
• The removal by the United States of some noneconomic sanctions designed
to restrict official interaction and contact between the two governments is
welcomed, and an even greater relaxation in bilateral communications, throughboth official and unofficial channels, should be pursued. The Task Force strongly
believes that expanding bilateral channels of communication, especially during aperiod of potential political change, will strengthen the United States’ leverage inachieving its goals in Burma. During the period before the planned elections, theUnited States should continue to pursue opportunities for direct talks with militaryleaders to press for genuine tripartite dialogue and the release of political prisoners.
• In pursuing pragmatic engagement with Burma, the United States must
continue to develop, and even ramp up, means of reaching the Burmese
population directly through assistance programs. This is especially necessary if
the military or a military-controlled civilian regime maintains harsh authoritarian
governance in Burma, even after the parliamentary elections. In the past few years,
U.S. humanitarian assistance to Burma has expanded rapidly in response to direhumanitarian needs—particularly in the aftermath of Cyclone Nargis—and tosupport the growth of civil society and community development.5 Assistance toNGOs that have no connections to the military and are not officially registered
In October 2009, the United States announced that it would add another $10 million to the $75 million alreadypledged to assist NGOs in cyclone relief efforts.

510

with authorities should be expanded. U.S. assistance also should be targeted
toward small farmers and small and medium-sized businesses that help to createfunctioning communities.
	In approaching the question of increasing assistance, however, the UnitedStates must be vigilant in examining the dangers of expanding the flow of
economic resources into Burma. This is especially true if the government remains
prejudiced against foreign assistance that is not channeled through governmentorganizations, where it easily can be turned to purposes other than those intended.
Unfortunately, the new constitution effectively excludes anyone receiving foreignassistance from running for election, so a hostile attitude toward foreign aid isalready built into the new government.
• A ny future expansion of U.S. humanitarian aid programs inside Burmashould not be accomplished at the expense of existing cross-border assistanceprograms, which remain essential. Cross-border programs, particularly thoseoriginating in Thailand, are needed because the constitution provides no vehicle forthe return of Burmese refugees and exiles, whose humanitarian needs remain acute.
In fact, the constitution appears to set up barriers to their return. Additionally,
the many impressive and well-established NGOs and other aid organizations inneighboring countries will continue to provide a vital means of supporting andsupplementing assistance programs inside Burma, particularly those for minority
nationalities, which are likely to continue to operate under severe restrictions evenafter the elections.
• Educational exchange under the Fulbright and Humphrey Scholar programs
and cultural outreach activities should be expanded. These programs produce
powerful agents for community development in Burma and can significantly
expand the prospects for improved governance. Although the military
government is highly averse to foreign cultural influence in the country, the U.S.
Embassy’s American Center has long served as a cultural focal point for many
Burmese living in the Rangoon area. If the election produces a transfer of power
to a less xenophobic leadership, the United States should support the extensionof American Center programs through the Internet, the deployment of visiting
speakers to other cities, and other forms of cultural outreach. If political transition
produces real change, marked by full participation of opposition and non-Burman
ethnic representatives in elected government, U.S. scholarship and visitor programs
should be expanded to include Burmese government officials.
• A s for the elections, the United States should avoid direct participation inelection monitoring, as this could be seen as conferring legitimacy on aseriously flawed election process. However, the United States should facilitate
the provision of educational materials on election and parliamentary processes to11

groups in Burma and on the Thai border that are conducting voter workshops andseminars, with a particular emphasis on state/division-level elections, which may
become important to ethnic minorities. Voice of America and Radio Free Asia also
could help educate voters.

Stage 2: Additional measures to be implemented if and when the United States
begins to see indications of change on the part of the Burmese leadership
U.S. policy should shift to a second stage if Burmese leaders begin to relax political
restrictions, institute economic reforms, and advance human rights. During this stage, theUnited States should pursue measures designed to assist the process of developing moredemocratic institutions, both inside and outside government, and to encourage government
capacity building. If there is no movement on these fronts, there will be little room for
improving U.S. relations with Burma, and, in fact, pressure in the United States fortightening sanctions and other punitive measures likely will follow. If the U.S. government
has no recourse but to pursue stronger sanctions, the Departments of Treasury and Stateshould coordinate with other countries and organizations, including the EU and ASEAN
in particular, to enlist them to also evoke financial and banking sanctions to ensure thatmilitary leaders and their associates cannot evade the impact of what otherwise would
be less-effective unilateral sanctions. The United States Special Policy Coordinator should
coordinate sanctions implementation via an ongoing research team that maps and targets
where and with whom these individuals engage in business. In such a scenario, U.S. policy
essentially would be left in Stage 1, with limited engagement and assistance confined largely
to humanitarian, community development, and limited capacity-building programs.
If a different scenario emerges that includes the release of political prisoners, including
Aung San Suu Kyi, and a demonstrated tolerance for expanded political activity, it should
open the way for a much more active role by the United States in assisting with capacity
building, governance training, and international efforts to encourage economic reforms.
During this stage, the Task Force recommends the following:• The United States should explore the feasibility of forming a support group with
Australia, Burma, China, the European Union, India, Indonesia, and Japan,
perhaps under the auspices of the United Nations, to provide a mechanism fororganizing international coordination and assistance for Burma’s transition, both
politically and economically. Such a group also could marshal other governments
and international institutions as appropriate to focus on specific tasks, but its main
objective should be to coordinate and demonstrate collective encouragement of reform,
good governance, and the protection of human rights. To the extent that the UnitedStates can develop collaborative efforts with key Asian stakeholders, particularly withregard to economic reform initiatives, it will increase the possibility of achieving
progress, because advice and support from these countries, rather than Westerngovernments, are likely to be more welcome by the Burmese leadership.

12• If the elections in Burma take place in 2010 as scheduled and succeed inreplacing the current military government—the State Peace and Development
Council (SPDC)—with a quasi-civilian government, the United States must
be positioned to interact with the elected politicians and civil servants in the
new ministries and other government structures. In so doing, the United States
will be able to assess the nature of the change taking place in Burma and decide
where it can make positive contributions. This interaction also could include, forexample, a relaxation of the U.S. visa ban on government officials to allow selected
invitees to visit the United States.
• The United States should prepare to implement measures that will ease theway toward improved economic relations and the eventual removal of tradeand investment sanctions. These measures should be implemented only if politicaltransition produces a government that demonstrates a genuine commitment
to economic development, particularly small and medium enterprises, and awillingness to embrace basic political and economic freedoms—including the endof gross human rights violations—that allow development to take place.
 first measure is the provision of expert advice. Accordingly, the UnitedA
States should gradually release current injunctions on and partner withinstitutions such as the International Monetary Fund, World Bank, and AsianDevelopment Bank to provide Burma with advice on reform. Expertise in
Burma’s economic policy-making bodies has been so degraded under military rulethat it may not provide sufficient capacity to engage in transformational economic
reform. Such advice should begin with the reform of data collection in Burma to
replace the current unreliable, inconsistent, and politically driven data collection
process with one capable of providing critical feedback and accountability.
 second measure is for the United States and other appropriate countries toAprovide Burma with assistance in economic institution building. There are agreat many needs on this front, but one of the most pressing is the need to create
mechanisms through which to direct the revenues that Burma is accruing rapidly
through its natural gas exports to development that benefits its people. Today, asa result of the deliberate policy choices of Burma’s government, these revenues
are creating a variant of the “resource curse” in which the country’s tremendous
gas wealth is hoarded and squandered by its leaders while its population remains
desperately poor. Efforts in other resource-rich countries provide a body ofexperience, including measures that the United States has supported, to improvetransparency and accountability over public funds in the face of entrenchedcorruption, mismanagement, and autocratic rule. This experience could be appliedin Burma to help create mechanisms that can better direct resources toward public
needs.

13

	A third measure is for the United States to provide assistance in the formof micro, small, and medium finance to Burmese entrepreneurs to support
tackling its grave crisis in rural indebtedness, a lack of new and affordable
credit for farmers, and an absence of viable enterprise in rural areas. Rural
Burma, once the location of some of the most productive and prosperous paddy
farmers in the world, is currently in great economic distress. One of the causes ofthis distress is an extreme paucity of credit for farmers and rural enterprise, whichlies at the heart of increasing food insecurity in many parts of Burma. Micro,
small, and medium finance presents a readily available mechanism to reduce these
problems in Burma’s rural credit markets. It is a particularly useful device in conflictand politically sensitive areas, and in minimizing corruption and misappropriation.
A private micro, small, and medium finance wholesale funding vehicle shouldbe created, building on schemes in Burma that are already benefiting from U.S.
funding and other support.

Stage 3: Actions to be undertaken after real progress has been demonstrated
on a sustained basis
Stage 3 would commence when there is clear evidence of change that can be further
developed and supported—for example, when the civilian population believes that the new
government is serving its interests, when it is safe to run for office and engage openly inpolitical activity, and when a new generation of socially responsible political and militaryleaders has emerged. A second round of parliamentary elections, planned for 2015, would
provide a more reliable measure of political progress in Burma than the first round in 2010,
and could be a key indicator of such change. If there is definitive progress in these areas,
engagement should expand, and sanctions should begin to diminish.
During this stage, the Task Force recommends the following:• The United States should create aid programs designed to improve civil
service capacity and the effectiveness of government welfare and education.
The United States should begin selective development assistance, health andeducation assistance in cooperation with government ministries, significantly
expanded outreach and public diplomacy programs, educational exchanges, andmany other elements of normal relations with an underdeveloped country. USAID
could conclude a bilateral assistance agreement with the Burmese government,
paving the way for broader, more cooperative programs. Assistance from theUnited States—and from the international community more generally—is vitally
important. U.S. assistance programs will be even more important if the country
reinstates elected government, and should be expanded as circumstances warrant.
• The United States should begin to focus on legal reform to address civil rights,
economic law, and corruption. Eventually, it might become possible to provide
assistance and training to parliamentary and legislative organizations. All of these14efforts should place special emphasis on minority nationalities to facilitate their fullparticipation in the country’s political and economic development.
• The United States should encourage the creation of a flexible mechanism thatwill allow some sanctions to be lifted, while maintaining others and holding
the capacity to impose new, tightly targeted financial sanctions should
circumstances deteriorate. This mechanism would be based on a measured
and transparent formula for calibrating these sanctions to alleviate the negative
impact on Burmese workers and small entrepreneurs, while continuing to target
those engaging in harmful practices. The measurement criteria should include
civil liberties, political rights, voice and accountability, the extent of the rule oflaw, and controls on corruption. Such criteria would discourage empty promises
and backsliding as the United States increases its interaction with the Burmese
government, while recognizing that human rights and other critical determinantsof a decent life are essential to achieving good governance.6• The United States should position itself to promote security sector reform in
Burma. In addition to advancing reforms in the judiciary and oversight ofthe country’s military and police, the United States should prepare to expand
bilateral relations with Burma’s security forces and restore some form of security
assistance, particularly police training assistance, if concrete developments inhuman rights and a clear intention to professionalize Burmese security forcestake place. Such efforts should be aimed at building up a police force that canoperate under civilian rule and establishing a judiciary to handle rule of law issues.
Military-to-military work could be carried out jointly with Indonesian officers,
who also could impart a regional appreciation of civilian rule over the military. In
the area of police training assistance, the United States should turn to other nations
that have national police experience, such as Australia, Canada, New Zealand, or
the United Kingdom. The United States and the region more broadly also could
benefit from expanded, but carefully monitored, counternarcotics cooperation andother programs related to international criminal activity into and out of Burma.
There are no easy solutions, and the path forward will not be smooth. In every respect,
the conditions in Burma are among the most dire of any country in the world, and it willtake decades, if not generations, to reverse current downward trends and create a foundation
for a sustainable and viable democratic government. The United States must ensure that its
policies do not inadvertently support or encourage authoritarian and/or corrupt elements in
Burmese society. At the same time, if the United States sets the bar too high at the outset,
it will deny itself an effective role in helping to move Burma away from authoritarian ruleand into the world community.
See Appendix A, “A Mechanism for Assessing and Appropriately Adjusting Economic Sanctions on Burma,” which was
written by Sean Turnell, an advisor to the Task Force.
6

15

Current Realities
The Context of Change
In this report, the Asia Society’s Task Force on U.S. Policy toward Burma/Myanmar
aims to provide a road map detailing how the United States can best approach a new pathof engagement with Burma. The Task Force believes that changing circumstances inside
and around the country warrant wider U.S. engagement not only with Burma, but alsowith the Southeast Asian region and other key stakeholders, than has been the case in the
recent past. These circumstances include the following:•A serious and troubling decline in human rights in Burma since the mostrecent popular uprising in 2007. The number of political prisoners doubled in
the course of less than a year and came to include not only members of opposition
political parties, but also monks, journalists, and community activists, who weredetained primarily for protesting deteriorating economic and social conditions.
Many have been sentenced to lengthy prison terms—some in excess of 100
years—in closed court proceedings. At the same time, the regime’s violent attacks
on non-Burman minorities along the country’s eastern border have intensified.
The United Nations, U.S. Department of State, Human Rights Watch, and othernongovernmental organizations (NGOs) have reported extensively and reliably on
the military regime’s record of human rights abuses, including the denial of aid,
forced labor, the use of child soldiers, violence against ethnic minorities, forced
displacement, systematic and widespread rape, torture and extrajudicial killings,
religious persecution, and other atrocities.7• The continuing decline of Burma’s agricultural sector. Despite the large influxof foreign capital, the Burmese military has laid waste to the country’s agricultural
wealth—once the mainstay of Burma’s economy—pushing it to the brink of collapse.
•S trategic interests and rapid economic growth in the region. As a result of its
location between two of Asia’s giants—China and India—Burma is now the focus
of a geopolitical contest for influence between the region’s biggest powers, whichhave economic and strategic interests in the country. The region’s rising economic
power has made Burma a highly attractive source for natural resources and raw
materials. This has put the Burmese generals at the center of windfall hard currency
profits. In particular, the large sums of money accruing from energy projects are7
For recent examples, see the Report of the UN Special Rapporteur on the Situation of Human Rights in Myanmar, http://
www.ohchr.org/en/countries/asiaregion/pages/mmindex.aspx (accessed January 14, 2010); U.S. Department of State,“2008 Human Rights Report: Burma,” in 2008 Country Reports on Human Rights Practices (Washington, DC: Bureauof Democracy, Human Rights and Labor, 2009), http://www.state.gov/g/drl/rls/hrrpt/2008/eap/119035.htm (accessed
January 14, 2010); and Human Rights Watch, Burma’s Forgotten Prisoners (New York: Human Rights Watch, 2009).

16

being siphoned from the national treasury and channeled into activities that do
not promote or contribute to economic development or to the welfare of the vast
majority of the country’s population. The generals and their business cronies havebecome very rich, while the people have sunk deeper into poverty.
•D evelopments that contribute to regional instability. Several factors could
intensify the threat that Burma poses to regional stability and security, including its
murky relationship with North Korea, greater instability along its borders as a resultof military efforts to rein in insurgent groups, the continuing export of disease andrefugees, and the trafficking of drugs and contraband across its porous borders.
• Th
 e 2010 elections and possible changes in Burma’s government. If elections
take place in 2010 as planned, the key indicators of change will be whether the
resulting government relaxes political restrictions, institutes economic reforms, andtakes substantial measures to advance human rights. If there is no movement onthese fronts, there will be little room for improving U.S. relations with Burma, and,in fact, pressure in the United States for tightening sanctions and other punitive
measures likely will follow. On paper, Burma’s new constitution, promulgated in
2008, outlines a transition to an elected, civilianized government, albeit one inwhich the military retains an important measure of control. If the generals begin
to shift leadership to a parliamentary government in the next few years and transfer
meaningful power to civilian leaders, the door could open for political change.
Despite the constitution’s heavy military overlay, its prescription for multiparty
parliamentary government could form the foundation for a political process (which
has been absent in Burma for 20 years) that would produce pressure for both politicaland economic reform over the coming decade. Additionally, as Burma’s current
military leadership ages, it is preparing to pass the mantle of military command
to a considerably younger set of leaders, with an age difference of some 20 years.
Therefore, the outcome of the election—particularly if it leads to a reestablishmentof genuine parliamentary government—could, at a minimum, coincide with a newgeneration of military leaders. It remains to be seen whether this process will lead tofundamental change, or whether it will merely bring about the trappings of changewith the next-generation military leadership in charge.
• Th e expansion of nongovernmental activity. In the face of nefarious restrictions
on the delivery of aid, the cumulative effect of nearly 20 years of experience on
the ground in Burma by international aid agencies and NGOs appears to haveopened a wider space for grassroots activity and for providing support to a growing
body of local NGOs and community-based organizations. These efforts are of vital
importance, as the Burmese government does not allow aid to reach most ethnic
and conflict-affected areas. Recent rumors that Burma’s leadership may suspend
NGO activity for a period coinciding with the elections signal are troubling.

17•A
 SEAN as a key venue for encouraging reforms in Burma. Indonesia and someother countries of the Association of Southeast Asian Nations (ASEAN), which
once refused to criticize the internal affairs of its members, have developed both
politically and economically to the point that they may have the will to encouragechange in Burma, a fellow ASEAN member. However, it remains unclear whether
those ASEAN members that can bring the rest of the group along are willing totake on the leadership role to do so.
•L essons learned from past experiences. Some 20 years of post–Cold Warexperience have taught the United States important lessons about the difficulty andcomplexity of building a foundation for democracy in politically and economically
undeveloped countries, where violence and coercion, rather than negotiation andmediation, are often the preferred method of settling internal differences.
Combined with the political and economic changes taking place in the region overthe past 20 years, these developments create a context for both risk and opportunity. For
instance, if the country begins a transition, there is a risk that the many resentments
seething just below the surface in Burma could spawn violence and disorder. On the other
hand, if a process of reform begins, over time, it could present new opportunities for foreignassistance and an influx of expertise—which have been deliberately thwarted by successive
military regimes. This could help contain agricultural and health disasters, among otherthings, and give the population new hope for its future. Either way, rapid evolutions in
Burma could have unforeseen consequences for the rest of the region.

Political Background
Burma has been governed by military dictatorship for five of the six decades since it
gained independence from British colonial rule in 1948. When the first military dictatorship
was replaced in the face of a popular uprising in 1988, it was succeeded by another militaryclique, one that pledged to restore multiparty parliamentary governance through electionsin 1990. The uprising of 1988 also brought to the forefront a new national hero: Aung San
Suu Kyi. Her father, General Aung San, had fought to free Burma from colonial rule andwas assassinated by a fanatical opponent as he was preparing the country for independence
in 1947. Although the political party that Aung San Suu Kyi helped organize for the1990 elections, the National League for Democracy (NLD), won more than 80% of theparliamentary seats in the election, the military regime refused to seat the new parliament
until a new constitution could be written.
For the next two decades, the military regime, which calls itself the State Peace andDevelopment Council (SPDC), proceeded to jail NLD members elected to parliament,
as well as many other political activists; to violently repress popular demands to restore
democracy; and to severely restrict fundamental human rights. The regime has also held
Aung San Suu Kyi in detention for 14 of the last 20 years. Nevertheless, she continued to18

speak out for democracy, advocating that the international community should not support
the military regime until it agreed to join with the country’s democratic groups and minority
nationalities to return the country to democracy.
In October 2000, after a series of internationally embarrassing stand-offs with Aung
San Suu Kyi over constraints on her travel beyond Rangoon, the regime entered into
“confidence building” talks with her and senior members of her political party. After 18
months of discussions, Aung San Suu Kyi was released from detention and allowed to travel
freely throughout the country, on the understanding that this would give her a chance
to gain a better appreciation of the country’s development during the previous decade.
For her part, she hoped this would lead quickly to serious tripartite negotiations with theregime on a plan for transition to parliamentary government. As she traveled around thecountry during the year of her release, however, she drew enormous crowds of well-wishers,causing alarm within the military leadership that the momentum of her popularity could
derail plans for a controlled transition. In late May 2003, the leadership staged an attackon her motorcade during a trip near Mandalay, and she was taken back into detention. In
August 2009, on the pretext that she had violated the conditions of her detention as a resultof an uninvited visit by an American citizen, she was sentenced to another 18 months ofdetention, part of the regime’s effort to clear the decks of opposition in preparation forparliamentary elections in 2010.
In the face of continuing repression, intimidation, and denial of basic freedoms, in2007 and 2008, the country experienced a marked expansion of public activism andcommunity development initiatives, the results of two major events that had profoundpsychological impacts on the population. The first occurred in August and September 2007,
when mass demonstrations—which came to be known as the Saffron Revolution—led bytens of thousands of Buddhist monks broke out in Rangoon and other cities to protest thehardship engendered by the military government’s deliberate political choices and economic
policies. Failing to coerce the monks back to their monasteries with verbal threats, theregime opened fire on them. This act horrified the country’s devoutly Buddhist populationand sacrificed the respect of the country’s 400,000-strong monkhood, which the generals
had until then considered crucial to their legitimacy.
The second event occurred in May 2008, when the strongest cyclone in Burma’s
history—Cyclone Nargis—flooded the Irrawaddy River Delta. The government hesitatedto allow an immediate full-scale international relief effort on the delta, motivating large
numbers of Burmese civilians to join forces in ferrying caravans of food and medical aid tothe cyclone’s survivors. The two events, occurring in the space of less than a year, combined
to strengthen the country’s incipient civil society movement and consolidate its alliancewith religious institutions. Today, the civil society movement continues to institutionalize
and expand its capacity, although the regime recently signaled that it may require both
domestic and international nongovernmental organizations (NGOs) to cease operations
during the election period.

19

While these two events unfolded, the SPDC was in the final stages of producing a
new constitution.8 The final constitution was drafted in the interim between the Saffron
Revolution and Cyclone Nargis and brought to a national referendum in the immediate
aftermath of the cyclone. The regime’s crass effort to bulldoze approval of the constitution ina national referendum, rather than responding adequately to the devastation of the cyclone,
discredited the constitution with the population. Most citizens of Burma expect that it will
simply codify continued military rule. Even today, as preparations for the elections begin
to take shape, the vast majority of Burmese who will be participating in the process have
yet to read the constitution.
In the aftermath of the Saffron Revolution of 2007, the regime cracked down on all thosewhom it imagined responsible for the uprising, detaining hundreds of activists, monks, nuns,
political figures, artists, and journalists and sentencing them to lengthy prison terms in closed
court proceedings, effectively doubling the number of political prisoners in the space of afew months. Sentences for political activists have also become much harsher (in some cases,
exceeding 100 years), charging them under archaic provisions in the Penal Code criminalizing
free expression, peaceful demonstrations, and the formation of organizations not sanctionedby the government. Many political prisoners have been isolated from friends and families andsent to remote locations in squalid conditions, where ill treatment and torture are common.
Prison conditions have deteriorated in general, particularly with the suspension of prison visitsby the International Committee for the Red Cross several years ago.
Conditions in non-Burman minority areas have also remained bleak, as the regime
has continued its inexorable campaign against the remaining insurgencies along its borders,
destroying villages, pillaging and raping, and displacing large numbers of people. The
army’s practice of confiscating land in ethnic minority areas has only intensified with its
need to support additional forces, as it brings more territory under subjugation and expands
its economic interests in agricultural production and resource exploitation. Minority
nationalities in general, with the exception of the larger cease-fire groups, continue to be
excluded from economic and political advancement.
During 2009, international attention focused on an ominous trend in the SDPC’s
relations with North Korea, which were reestablished in 2007 after a 24-year hiatus.9 Some
reports have indicated that the arms trade between Burma and North Korea may include anuclear technology component, as well as technical assistance with tunnel construction forprotecting the SPDC’s military assets. The SPDC reportedly has given assurances to several
governments that it will not abrogate its responsibilities under the Nuclear Non-Proliferation
Treaty, and rumors of nuclear weapons aspirations by the SPDC remain unsubstantiated.
Nonetheless, these rumors are unsettling to Burma’s neighbors and threaten to introduce a
new source of instability into the region.
See Appendix B, “The Current Trajectory: 2010 Elections and the Economics of the Constitution,” which was written
by Priscilla Clapp and Sean Turnell, advisors to the Task Force.
9
Burma and North Korea severed diplomatic relations following a bomb attack by North Korea in 1983 that targeted asenior South Korean delegation traveling in Rangoon.
820

When U.S. Senator James Webb visited Burma in August 2009, he was unexpectedly
received by Senior General Than Shwe and given access to Aung San Suu Kyi, in marked
contrast to a visit made several weeks earlier by UN Secretary-General Ban Ki-moon. The
SPDC also released the U.S. citizen who had been arrested for his unauthorized visit to
Aung San Suu Kyi’s home. The positive atmosphere of the Webb visit, followed almost
immediately by the regime’s attack on the ruling faction of the Kokang cease-fire group, wasinterpreted as a sign that the SPDC wished to rebalance its relations with the United States
and China. The positive note struck during the Webb visit probably was also indicative of
the SPDC’s hope that the U.S. policy review that had been under way for several months
might bring a warming of U.S.–Burma relations. Shortly after the Webb visit, Aung San
Suu Kyi sent a letter to Senior General Than Shwe, offering to help the regime seek relief
from economic sanctions and asking to meet with foreign ambassadors to learn more about
what these sanctions entailed. Than Shwe approved her request, and she was allowed to meetwith U.S., U.K., and Australian diplomats in Rangoon. A second letter from Aung San Suu
Kyi to Than Shwe, in which she requested to meet with senior NLD representatives to begin
laying the groundwork for assistance with both sanctions and international humanitarianassistance, appears to have received no response as yet. Subsequently, she was allowed tomeet with senior NLD officials, but apparently there has been no further response to her
offers to assist the leadership with sanctions and humanitarian assistance.
In September 2009, the Barack Obama administration announced that it hadcompleted its policy review and would be seeking engagement with the military regime
in order to balance its policy of economic sanctions. Assistant Secretary of State for East
Asia and Pacific Affairs Kurt Campbell initiated the new “pragmatic engagement” policyby meeting with senior Burmese officials at the UN General Assembly in September. In
November, he became the most senior U.S. official in nearly 15 years to travel to Burma
to meet with the SPDC leadership. While these meetings do not seem to have produced
any concrete results, he was able to meet with Aung San Suu Kyi, giving the United States
its first opportunity since mid-2003 to explore her views in detail. He also met with senior
NLD members and representatives of ethnic minority groups. Later that month, President
Obama attended the ASEAN-U.S. Leaders Summit in Singapore—the first meeting of
its kind—where he met with Burmese prime minister Thein Sein, along with nine otherleaders from ASEAN (Association of Southeast Asian Nations) countries. The findings ofCampbell’s “exploratory mission” and the president’s meetings in Singapore, as well as the
SPDC’s response to the new opening, will factor importantly into the administration’s
calculations about next steps in its Burma strategy.

Socioeconomic Background
Once known as the “rice bowl of Asia,” decades of economic mismanagement in
Burma have reduced this formerly prosperous land to destitution. In 2009, Burma’s per
capita gross domestic product (GDP) was just over US$1 a day. Even when adjusted interms of purchasing power parity, Burma’s GDP amounts to little more than $3 per person

21per day.10 In short, the daily life of the average person in Burma is characterized by grinding
poverty and unrelenting struggle for survival.
The dismal state of Burma’s economy is the product of nearly 50 years of inept
economic management under a succession of military regimes with a fundamentally
unchanging outlook. For decades, Burma’s military apparatus claimed the largest portionof the country’s output while, at the same time, undermining basic market institutions.
No effective property rights exist in Burma, and the rule of law is not even approximated.
Macroeconomic policy making is arbitrary, erratic, and uninformed. The SPDC spends
vastly in excess of its (declared) revenue and resorts to “printing money” to finance its
expenditures. Accelerating inflation and monetary chaos have been the predictableconsequences. Burma’s currency, the kyat, is widely distrusted, and it trades according
to wildly varying official and unofficial exchange rates. Apart from painting an image
that is rightly associated with the most chaotic of economies, this twin exchange rate
apparatus creates an obvious incentive for corruption, and it is a substantial barrier toforeign investment.
Critical sectors of Burma’s economy are starved of resources. This is especially thecase for Burma’s health and education sectors, where the country spends little more than
1% of GDP. This represents less than half the amount spent by the next poorest memberof ASEAN (Laos), and Burma is the only country in the region whose defense budget isgreater than that of its health and education sectors combined. The lack of spending on
health and education has had grave consequences. The UN estimates that upwards of 1.1%of the population is infected with HIV/AIDS, but independent health experts warn that thepercentage infected could be much higher than what is reported in official statistics.11 The
country also has a high prevalence of diarrhea, typhoid fever, and dengue fever. Children
are especially vulnerable, and nearly 10% of all Burmese children will die before their tenth
birthday from easily preventable diseases such as chronic malnourishment, pneumonia,
diarrhea, and malaria.12
Burma’s education system has degraded to such an extent that little more than halfof Burmese children complete primary school. The country is one of the few places in
the world where the present generation of students will be less well educated than theirparents. Burma’s schools lack the most basic of resources and subsist by levying all mannerof “fees,” exacerbating the already low school completion rates. Teachers are so poorly
10International Monetary Fund, “World Economic and Financial Surveys: World Economic Outlook Database,” http://
www.imf.org/external/pubs/ft/weo/2009/02/weodata/index.aspx (accessed January 26, 2010).
11
United Nations statistics cover infection rates for adults between the ages of 15 and 49. See Joint United Nations Programme on HIV/AIDS (UNAIDS), 2008 Report on the Global AIDS Epidemic (Geneva: UNAIDS, 2008), p. 220. Infection
rates, however, among Burma’s younger population (below the age of 24) are much higher, as are infection rates among“vulnerable” groups, including drug users and sex workers. For a discussion on the difficulties and challenges associated with accurate health reporting in Burma, see Open Society Institute, The Gathering Storm: Infectious Diseases andHuman Rights in Burma (New York: OSI, 2007); and UNAIDS, “Myanmar: Country Situation,” July 2008, http://data.
unaids.org/pub/ExternalDocument/2008/sa08_mmr_en.pdf (accessed February 19, 2010).
12
Catharine Dalpino, “Burma/Myanmar: Views from the Ground and the International Community,” National Bureau of
Asian Research, June 2009, http://www.nbr.org/research/activity.aspx?id=45 (accessed February 2, 2010).

22

paid that most engage in other activities in order to survive (including selling food tostudents), and they provide much of the set curriculum only through private tuition. The“selling” of entrance exams and degrees is a common practice and a particularly damaging
example of the widespread corruption in Burma that reflects the desperation in the country.
Meanwhile, the curriculum of Burma’s government schools is rigidly set by the regime
and taught more or less by rote. Higher up the education ladder, Burma’s universities are ashadow of what was once a regional beacon of quality. Under-resourced and deeply corrupt,
Burma’s universities are centers of surveillance and control that are routinely closed downby the regime at the first hint of unrest. Burma’s elite—including members of the regime
itself—mostly opt to send their children abroad rather than to local universities.
The extent of the SPDC’s economic mismanagement discourages most potential foreign
investment. What does enter is strongly concentrated in the gas, oil, and other extractive
industries. Scant employment is generated from such investments, and there is little in
the way of technology or skill transfer. The primitive state of Burma’s economy is clearly
revealed in its structural makeup. Dominated by agriculture and extractive industries, thecontributions of manufacturing and services to GDP remain extraordinarily small. In 2007,
a mere 13% of Burma’s GDP was generated by manufacturing and processing (compared
to 42% for China, 35% for Thailand, 21% for Vietnam, and 22% for Cambodia). Services
accounted for 27% of GDP (compared to 40% for China, 46% for Thailand, and 38% forboth Vietnam and Cambodia).13
Burma’s economy is highly dualistic, separated into an informal and a formal economy.
Most Burmese operate in the informal economy. Engaged in small-scale agriculture, petty
production, and trade and rudimentary services, the vast majority of people in Burma eke
out a living in an economy that is overwhelmingly, if not exclusively, local. The family is
the primary economic unit, and the methods and organization of production are largely
traditional. The average Burmese citizen spends more than 70% of his or her income on food.
This is the highest proportion among Southeast Asian nations and a significant indicatorof Burmese citizens’ slim margin of survival. A survey conducted by the United Nations
Development Programme and Burma’s own Central Statistical Organization found that
more than 30% of the population had incomes below the threshold necessary to provide
for basic food and other needs, a ratio that rose to more than 50% in non-Burman states
and regions.14
One avenue through which many thousands of Burmese households have been able tosurmount the precariousness of economic life in recent years is through remittances sent
home by family members working abroad (both legally and illegally). According to datafrom the International Monetary Fund (IMF), remittances of $65.7 million were sent to
Burma in 2006 (the latest year for which we have data).15 This is likely to be a considerable
Asian Development Bank, Asian Development Outlook 2007: Growth amid Change (Manila: ADB, 2007).
United Nations Development Programme, Impact of the UNDP Human Development Initiative in Myanmar, 1994–
2006 (Yangon: UNDP, 2006).
15
International Monetary Fund, Balance of Payments Statistics Yearbook 2008 (Washington, DC: IMF, 2009).
13
14

23

understatement of their true magnitude and significance, however, as the overwhelming
volume of remittances to Burma are made through informal payment mechanisms (such as
hundi) that are not recorded in official data. Surveys of remittances to Burma suggest that
average annual payments per sender amount to more than Burma’s per capita GDP, and that
aggregate flows likely exceed $300 million.16 In November 2009, it was widely reported in
the Burmese press that the country’s labor ministry had issued an edict requiring nationals
working abroad to remit up to 50% of their incomes—30% for those earning less than$400 per month and 50% for those earning more—through the Myanmar Foreign Trade
Bank. Such a policy, which will be widely evaded, likely will be as ineffectual as it is ill
considered.
Burma’s formal economy—which includes the country’s vast state sector and much of
the trade in raw materials, precious metals, stones, and energy—is dominated by entities(including Burma’s two major military-owned conglomerates, the Union of Myanmar
Economic Holdings Limited and the Myanmar Economic Corporation) and individuals
connected to the country’s ruling military regime. Burma’s military rulers have been
extraordinarily inept at managing the country’s macroeconomy. However, they have
proven to be expert at ensuring that the economy’s commanding heights, the trades thatgenerate foreign exchange, and any new and profitable opportunities that emerge remain
concentrated in their hands. As we shall explore later, this is especially true in Burma’s
burgeoning exports of natural gas—the financial bounty of which is hidden and squanderedby Burma’s military leadership.
The suffocating control that Burma’s military wields over the formal economy has
had dire implications for the economic welfare of its citizens, but this fact is not without
relevance to the debate over economic sanctions. Simply put, it is the formal economy—
reliant on international demand and international financial and other services—that is mostvulnerable to sanctions. Therefore, the burden of sanctions on Burma is borne primarily by
the actors in its formal economy, who are also its dominant political actors. This suggeststhat the removal of sanctions in Burma would not lead to the rise of an alternative centerof economic power outside the military regime in the form of a “business class” that, inthe tradition of nineteenth-century Europe, America, and Australasia, emerges as a liberalforce demanding reform.
A significant underground economy also exists in Burma. Much of this simply
represents the everyday activities of the Burmese people and their efforts to survive by
weaving through the thicket of obstacles thrown in their path by their government. Someof it, however, is objectively illegal. According to an October 2007 report prepared by the
U.S. Congressional Research Service, organized crime and ethnic cease-fire (and non-ceasefire) groups in Burma work in collaboration or collusion with the military government tocontrol a vast illegal enterprise that functions throughout Southeast Asia:
16
Sean Turnell, Wylie Bradford, and Alison Vicary, “Migrant Worker Remittances and Burma: An Economic Analysis ofSurvey Results,” in Dictatorship, Disorder and Decline in Myanmar, ed. Monique Skidmore and Trevor Wilson (Canberra:
ANU E-Press, 2008).

24

Trafficked drugs, humans, wildlife, gems, timber, and other contraband flow throughBurma, supporting the illicit demands of the region and beyond. Widespreadcollusion between traffickers and Burma’s military junta, the State Peace andDevelopment Council (SPDC), allows organized crime groups to function with
virtual impunity. Transnational crime in Burma bears upon U.S. interests as itthreatens regional security in Southeast Asia and bolsters a regime that fosters aculture of corruption and disrespect for the rule of law and human rights.17
Burma is currently the world’s second-largest producer of opium and the dominant
producer and exporter of methamphetamines into Southeast Asia.18 The profits from thistrade have served to capitalize many of Burma’s largest private conglomerates, which also
provide the vehicles through which drug profits are laundered. The laundering process is
manifest in all manner of activities—from the more obvious (casinos, gem and precious
metal trading, banking) to infrastructure building, tourism, industrial agriculture, importexport business, housing construction, retailing, and lucrative music and film pirating
activities. The significance of all of this is that many of the dominant private-sector players
in Burma today are questionable entities that enjoy the tolerance and protection of the statein order to conduct their activities. Such actors and other businesses engaged in activities
that, while not necessarily illegal, nonetheless depend for their success on their proximity
to the regime are not likely agents of positive change in Burma.
Burma’s economic performance is sapped by corruption that runs through all levels ofsociety, from the “tea money” demanded by petty officials, to large-scale larceny on the partof Burma’s regime and their business partners. Like the country’s teachers, civil servantsin Burma are paid far less than a living wage, and the extraction of bribes for tasks thatostensibly are part of their employment is routine. The country is ranked as the third mostcorrupt in the world according to Transparency International’s Corruption Perceptions
Index 2009 (behind Iraq, but ahead of Afghanistan and Somalia). The pervasiveness ofcorruption in Burma imposes great costs on the economy in myriad ways—including, but
not limited to, the misallocation of resources to those able to pay the biggest bribes; thefurther undermining of what residual trust remains in public institutions; heightened risks
in undertaking productive investment; increased expense of doing business along withincreased uncertainty; and the reinforcement of income and wealth inequalities.
Cyclone Nargis and the Drought of Rural Finance
In May 2008, Cyclone Nargis cut a swathe through lower Burma, blighting muchof the country’s most productive land in the Irrawaddy River Delta. Nargis killed an
estimated 140,000 people, left 800,000 homeless, and caused severe hardship for a third
17
Liana Sun Wyler, “Burma and Transnational Crime,” U.S. Congressional Research Service, Report No. RL34225, April
27, 2009, http://assets.opencrs.com/rpts/RL34225_20090427.pdf (accessed February 2, 2010).
18
See U.S. Department of State, “2009 International Narcotics Control Strategy Report, Country Reports,” February 27,
2009, http://www.state.gov/p/inl/rls/nrcrpt/2009/vol1/116520.htm (accessed February 2, 2010). The National Drug
Threat Assessment of 2009 notes that no Burmese heroin has been found in the United States since 2006.

25

of the region’s roughly 7.5 million inhabitants.19 In its economic dimension, this hardshipwas manifested above all in a sudden and devastating shock to incomes. Surveys taken in
the first few months after Nargis revealed that the poor population—the vast majority—inaffected areas had their spending power effectively halved. As a result, Burmese citizens areunable to afford food, and the country is presently facing chronic food insecurity despite
promising reports of a recovery in paddy and food production since the storm.
The human and physical destruction caused by Nargis captured the world’s attention.
Less in focus, however, were the institutional failures and shortcomings revealed in thecyclone’s aftermath. Prominent among these is the near-complete failure to provide thefinancial resources necessary for the reconstruction of physical infrastructure and therehabilitation of livelihoods. Early accounts immediately following the cyclone revealed thatmost households in cyclone-affected regions had no access to credit of any kind. Traditional
informal credit networks—such as advanced payments by farmers to agricultural laborers
in the form of rice or the “storing” of wealth in the form of livestock that could be sold ina crisis—had collapsed as rice and livestock were lost to the storm.
Throughout all of this, Burma’s government was of negligible help. What little assistanceit did provide—cultivating equipment that was often dysfunctional, poor-quality seeds, andvery little in the way of fertilizer—it did so as interest-bearing debt payable after the first
harvest, rather than as grants. Moreover, Burma’s rural credit system remains moribund.
Even credit traditionally available to cultivators from moneylenders at interest rates of 10%
to 20% per month is unavailable in many parts of the country. As a consequence, cash has
all but disappeared from rural Burma, and “almost all farmers . . . [have] little if any paddy
left over for home consumption right after harvest because they had to sell everything at
harvest time.”20
Burma’s rural financial system was dysfunctional well before Cyclone Nargis. The
agricultural sector, which provides more than 70% of employment in Burma and around
50% of the country’s GDP, receives a little more than 1% of Burma’s formal credit. Burma’s
rural finance arrangements suffer from broad official neglect, a weak policy environment,
an inappropriate regulatory structure, a lack of institutional capacities, and a dearth offormal expertise. Government-imposed interest rate caps on all lenders and the perennial
inability of farmers to fully use their land as loan collateral (the state is the owner of allland in Burma) add to country’s financing problems. The latter is especially egregious inthat, in the absence of formal credit provided on the basis of land as collateral, cultivators
are often forced to pledge their use rights to informal moneylenders. The high interest
rates charged by moneylenders only add to the economic woes in rural Burma, creating
a situation in which indebtedness has once more (replicating the disasters of the 1930s)
Tripartite Core Group, “Post-Nargis Joint Assessment,” July 2008, http://www.asean.org/21765.pdf (accessed February
2, 2010). The figure of 140,000 deaths resulting from Nargis is based on an estimate put forward by Burma’s government.
20David Dapice, Tom Vallely, and Ben Wilkinson, “Assessment of the Myanmar Agricultural Economy,” International
Development Enterprises, John F. Kennedy School of Government, Harvard University, January 2009, http://ash.harvard.
edu/ash/myanmar_burma_assessment.pdf (accessed February 2, 2010).
19

26

emerged as source of widespread and growing landlessness. Meanwhile, Burma’s pervasive
environment of corruption ensures that what little funds are available to rural borrowers go
to larger farmers with the right connections.
External Economic Relations and Burma’s Natural Resources
The one bright spot with respect to Burma’s economy in recent years has been theapparent turnaround in the country’s external sector. In place of the chronic deficits that
until now have been characteristic, persistent surpluses have emerged, and along withthem, swelling foreign exchange reserves. For 2009, these reserves will increase to morethan $5 billion, largely as a result of Burma’s emergence as a major regional supplier ofnatural gas. Gas exports represented around a quarter of Burma’s exports by value in
2008–2009, and their strength comes from a mixture of rising gas prices and increases inexport volumes.
Burma’s success in exporting gas is attributable to its possession of large and exploitableoffshore natural gas fields in the Gulf of Martaban and the Bay of Bengal. Cumulatively,
these fields will bring in around $2 billion annually in export earnings for the next 20
to 30 years.21 The overwhelming majority of Burma’s current gas deliveries come fromthe so-called Yadana (jewel) fields off Mouttama, and the Yetagun (valiant banner) fields
off Burma’s Tenasserim coast, which came on stream in 1998 and 2000, respectively.
Yadana was established as a joint venture between Burma’s state-owned energy company,
the Myanmar Oil and Gas Enterprise (MOGE), in partnership with Total Oil (France),
Unocal (United States), and PTT Exploration and Production (Thailand). The Yetagun
fields were developed by MOGE, Premier Oil (United Kingdom), and Nippon Oil(Japan). Both consortia remain active today, although Chevron has taken over Unocal,
and Premier Oil transferred its stake in the Yetagun fields to Petronas (Malaysia). The
primary customer for the output from the Yadana and Yetagun fields is Thailand, which,in stark contrast to the historical relationship, now runs a substantial trade deficit with
Burma as a consequence.
Over the next few years, the export of gas from Yadana and Yetagun will be joinedby exports from new fields off Burma’s coast in the Bay of Bengal. These fields, the mostlucrative of which are collectively known as the Shwe (gold) fields, are being explored anddeveloped by a consortium that comprises MOGE and firms from South Korea (Daewoo
International and the Korean Gas Corporation) and India (Gas Authority of India Limited
and the Oil and Gas Corporation). China will be the primary recipient of this natural gas.
This project consists of a planned 2,400-kilometer pipeline starting at the port of Kyauk
Phyu in Arakan State, running diagonally through Burma, and ending in China’s Yunnan
Province. China also plans to build an oil pipeline alongside the natural gas pipeline to
reduce the need to move oil imports from the Middle East through the Malacca Straights.
Because the key players have shown little or no concern for human rights or environmental
21
British Petroleum, BP Statistical Review of World Energy, June 2009, http://www.bp.com/productlanding.do?categoryI
d=6929&contentId=7044622 (accessed February 2, 2010).

27

considerations, the construction of this trans-Burma “energy corridor” could be completed
by 2013.22 Depending on prices, the Shwe gas will deliver annual revenues to Burma of $1
billion to $2 billion for the next 30 years.
Burma’s gas earnings should be transforming the country’s prospects and expanding
the fiscal capacity for spending on basic infrastructure, health, and education that thecountry so desperately needs. However, the foreign exchange revenues that Burma isaccumulating currently are having next to no impact on the country’s fiscal accounts. The
reason is simple: Burma’s U.S. dollar gas earnings are being recorded in the government’s
published accounts at the official exchange rate of the kyat. This official rate—at around6 kyat to 1 U.S. dollar—overvalues the currency by nearly 200 times its market value,currently set at around 1,000 kyat to 1 U.S. dollar. Correspondingly, this understates the
local currency value of Burma’s gas earnings by an equivalent amount. Recorded at theofficial rate, Burma’s gas earnings translate into less than 1% of budget receipts. It is alla neat accounting trick that allows Burma’s leaders to hide immense revenues from thepublic and the international community, and it is properly understood as a mixture of grossmismanagement and the outright theft of Burma’s natural resources by a government thatis well practiced in both. If the same U.S. dollar gas earnings were recorded at the market
exchange rate, rather than stashed (reportedly in offshore accounts)23 and squandered by theindividuals who have access to the funds, their contribution would more than double total
state receipts and largely eliminate Burma’s fiscal deficit. Properly brought back to Burma,
the country’s gas earnings could allow substantial internally generated capital—more than
the amount necessary, for instance, to eliminate the cash and credit crisis that is plaguing
rural Burma and to easily meet the needs for post-Nargis reconstruction in the delta.
Beyond gas, Burma’s external trade follows a pattern that has been apparent for anumber of years. Burma’s largest trading partner is Thailand, which receives gas exports
from Burma. Fast-rising China is Burma’s largest source of imports and its second-largest
export market. China has also been Burma’s largest source of foreign direct investment inrecent years (most of which is related to mining activities), and, in many other ways, it themost visible foreign economic presence in the country. Combined with the prominence ofSino-Burmese workers in Burma’s economy, this last aspect does not come without tension
and some angst among Burma’s leaders. India has become an increasingly important market
for Burmese agricultural exports, while both Japan and Singapore remain significant
trading partners. Burma’s trade with Western countries is negligible.
22
Based on experience from previous oil and gas projects in Burma and current conditions in the areas through which thepipelines are to be built, many anticipate that forced labor will be employed in the construction of these projects and theirassociated infrastructure, and that they will result in illegal land confiscation, forced displacement, and unnecessary useof force against villagers. As has been the pattern with other pipeline installations in Burma, reports of land confiscation
around the port of Kyauk Phyu for oil and gas storage facilities are already emerging.
23
See EarthRights International, “Total Impact: The Human Rights, Environmental, and Financial Impacts of Total andChevron’s Yadana Gas Project in Military-Ruled Burma (Myanmar),” September 2009, http://www.earthrights.org/sites/
default/files/publications/total-impact.pdf (accessed February 2, 2010). Total’s denial of the claims in this report canbe found in “Total in Myanmar: Update, September 2009,” http://burma.total.com/en/publications/Total%20_in_Myanmar_update.pdf (accessed February 2, 2010).

28

The heavy hand of the state in Burma’s external trade is very apparent: In 2008–2009,
around 65% of trade was undertaken through state-owned enterprises. Although Burma
imposes relatively low formal tariffs, nontariff and nonformal trade barriers are substantial.
Export and import licenses are required for the movement of most commodities into andout of Burma, and licenses are usually issued under the remit of the Trade Committee of the
SPDC and its head (the second in command of the junta), Vice Senior General Maung Aye.
Burma’s substantial revenues from the sale of natural gas, which could rise to around$4 billion per annum in the years ahead, have not provided the opportunity to change
the economic “conversation” about Burma. Instead, windfall earnings from natural gas
exports have promoted political repression and undermined good governance, democracy,
the rule of law, and other attributes and institutions that are conducive to economic growth.
As a general matter, the distribution of hard currency revenues is decided by the SPDC
Committee Supervising Special Projects, chaired by Senior General Than Shwe, andnormally reserved for well-connected insiders and lavish regime projects. This, of course,
tends to encourage corruption and does not contribute to investment in ordinary citizens’
needs and developing human capital in the country.

29

Future Possibilities
The Asia Society’s Task Force believes that the new policy of “pragmatic engagement” with

Burmese military leaders is the right path for the United States to pursue. The United Statesshould prepare for a protracted period of more active engagement than it has taken in thepast, with the aim of helping to shape Burma’s future. U.S. influence in Burma is unlikely
to outweigh that of increasingly powerful Asian neighbors. What the United States offers
Burma is international legitimacy and access to the larger international community whenand if it seeks this. Therefore, the United States’ priority in determining its policy toward
Burma in the immediate term must be to clarify its fundamental objectives in Burma andthe basic means at its disposal for promoting those objectives.
Specifically, during this period of potential transition, the United States should:• Encourage the process of political development toward democratic norms• Press the military regime for good governance• A ssist the country’s non-Burman nationalities in developing an equitable voice innational governance• Continue to raise concerns about human rights and the situation of politicalprisoners
The basic means available to the United States to pursue these goals will be:• Effective channels of communication• Focused assistance programs• Reform-oriented economic activity• Coordination with Burma’s neighbors and the broader international community• Tightening of targeted financial sanctions, if and when necessary

Calibrating Engagement
The great uncertainties of the period ahead run the gamut of possibilities from better toworse—from eventual democratic development to violence, anarchy, and return to martial
law. Whatever the outcome, there is a great deal of work to be done on the ground before theBurmese population can build the institutions and develop the practices and responsibilities
intrinsic to stable democracy. To translate the ends and means outlined here into effective
policies that address Burma’s needs during this time of uncertainty and change, the UnitedStates will need to develop a menu of instruments to be employed if and when conditions
warrant and as opportunities for progress present themselves.

30

Expanding Channels of Communication
Burma’s military regime is the major obstacle to bilateral communication with othercountries. The SPDC heavily circumscribes the population’s—and even government
officials’—contact with the outside world. It has especially demonized contact with theUnited States and other Western countries, effectively making it illegal without official
permission. To compound matters, during the past two decades of sanctions-focused
U.S. policy toward Burma, the United States has deliberately narrowed the channels ofcommunication with the Burmese government, as well as with important segments of the
Burmese population. Even in the absence of a change in attitude by the Burmese government,
the Task Force believes that the United States should make every effort to reverse this policy.
The Obama administration’s decision to balance sanctions with “pragmatic engagement” isa good first step.
In addition to official, senior-level dialogue, U.S. programs already under way in Burmaprovide excellent means of bilateral communication. This includes humanitarian and community assistance, cultural activities at the American Center, and student scholarship programs. However, the United States should also make a greater effort to expand communication with Burma’s business community and, even more importantly, to establish wide contacts with its many non-Burman nationalities. Community assistance programs will help inthis regard. The Fulbright and Humphrey Scholar programs should continue to be expanded,
not only for the sake of bilateral exchange, but also to empower a new generation of leaders.
In a society so educationally deprived as Burma, the impact of a single U.S.-trained graduate
or postgraduate scholar is unbounded. Two U.S. government-financed radio stations, Voiceof America and Radio Free Asia, have been broadcasting news, commentary, and educational programs to Burma for years and have become a major source of outside information,even for military and government, despite the fact that it is illegal to listen to them. The
United States should continue to fund them adequately for full-time programming.
The apparent bias against external influence contained in the new constitution
does not augur well for relaxing current restraints on Burmese contacts with foreigners.
Nevertheless, the United States should be poised for new openings that may appear withtime, especially if direct dialogue with the government eventually begins to yield concrete
results. For example, under the right conditions, the cultural and educational activities of
the American Center could be extended through electronic means to other cities and areasof the country. Moreover, the United States should encourage more visits by American
scholars to Burma and to Burmese educational institutions, which are severely restricted
today. There are many other possibilities.
An important and often overlooked resource available to the United States is therelatively large Burmese diaspora living in the United States. Many have been here for ageneration or more and have managed to keep their family and other contacts in Burma
active. Some of these Burmese American professionals played an important role in the
post-Nargis relief effort, facilitating forms of emergency aid and recovery efforts on thedelta. If political changes begin to take shape in Burma, the United States should ramp31

up efforts to include the Burmese diaspora in U.S. assistance and exchange programs as ameans of expanding bilateral U.S.–Burma ties. Attention should also be given to creating
constructive openings for Burmese political exiles who wish to return home one day. With
the political experience and international exposure they have gained during their exile, they
could make an important contribution to a truly transforming Burma. Unfortunately, the
new constitution offers no apparent hope for this, ruling out participation in political life
by anyone who has not resided in the country continuously for the past 10 years.
Over the longer term, the United States should be prepared to normalize its relations with
Burma if the right conditions are met through its policy of direct dialogue. For example, if
the military regime releases political prisoners, including Aung San Suu Kyi, and takes othersignificant steps toward reform, the United States should be prepared to ease the symbolic
restrictions on bilateral relations. For example, it might consider recognizing the country as
Myanmar and upgrading diplomatic representation to ambassador in both capitals.
Operating in an Unhealthy Assistance Environment
In considering what type and how much foreign assistance should be provided to
Burma in the near and longer term, a clear distinction must be made between humanitarian(including grassroots) and economic development assistance. The delivery of meaningful,development-enhancing economic aid to Burma has not been possible for decades, as
successive military regimes have pursued a conscious policy of near autarky. Burma’s
current military regime has largely abandoned this position, but also has set up strict, often
suffocating, controls on foreign investment and official development assistance (ODA).
Moreover, revulsion to the regime’s unrelenting repression and human rights abuses led
to the suspension of most Western ODA, along with financial support from international
financial institutions such as the IMF, World Bank, and Asian Development Bank. Even
the mandates under which some of the UN agencies operated in the country became subject
to restriction. Nevertheless, Burma has been the recipient of ODA and other forms of aid
from a number of countries, and in 2007, before Cyclone Nargis, official ODA amounted
to around $197 million.
The empirical record of long-term development assistance—in contrast to short-term
humanitarian assistance—in Burma has not been encouraging, even if there is some evidence
to suggest that good economic policies and robust institutions can make a difference. Suchpolicies and institutions include measures that address most of the principal causes of Burma’s
poverty, that is, reforms to macroeconomic policies and settings such as fiscal consolidation,exchange rate unification, interest rate liberalization, and so on. More importantly, however,fundamental institutional reform must embrace the application of six core attributes:• Effective property rights• Basic freedoms, including at least an approximation of the rule of law
24

See http://stats.oecd.org/qwids (data accessed September 22, 2009).

32

• Basic functioning infrastructure• Government policy making that is rational, consistent, and informed by an honest
and efficient civil service• Market opening policies, including the removal of remaining restrictions on
private enterprise• Openness to foreign trade and investment
In Burma today, these attributes are virtually nonexistent, despite the limited market
openings instituted by the military regime.
Current U.S. assistance policy is oriented properly in not supporting development
assistance to Burma until conditions on the ground can ensure its effectiveness, namely,
through a combination of economic and political reforms described earlier. If and when atransition to quasi-civilian government takes place, as outlined in the new constitution, andproduces reform-minded governance, U.S. policy then should be oriented toward helping
to design and put these reforms in place. These conditions must be clearly outlined by theUnited States, and the United States should be prepared to provide development assistanceto Burma if they are met. Even in this case, however, the United States should recognize
the poor track record of developmental aid in Burma and make clear to the Burmese
regime that its own resources—namely, from its gas revenues—also must be committed
to development projects. It is likely that many of the problems that make the large-scale
provision of aid unviable today will persist for some time, even in a scenario in which there
is some positive political change. Development assistance is unlikely to gain traction solong as the same economic and political mismanagement persists and the Burmese people
lack the freedom to demand accountability.
Even in the area of humanitarian and community assistance, donor governments,
international NGOs (INGOs), and UN agencies have found themselves frustrated by two
decades of obstruction by the military regime. All UN agencies and major INGOs are
required to partner to some degree with government ministries, effectively tying them toindividuals who are intent on feeding off a rich deposit of foreign resources. (Burma’s low
rating with respect to corruption according to Transparency International has already been
noted.) Most of the government ministries are starved for resources to fulfill their public
functions. However, nearly all ministries are headed by uniformed military officers whotake their orders from the top and dictate the acquisitive attitude of their ministry towardforeign partners. Nevertheless, many foreign aid organizations have developed cooperativeand productive relationships over the years with mid- and lower-level civil servants ingovernment ministries. Many of these civil servants genuinely wish to serve the people,
and they find the foreign agencies much more responsive and helpful than their own
government. The foreign aid organizations have also managed to help develop and sustain
an increasingly vibrant community of local NGOs and community-based organizations
over the past two decades. These nongovernmental and community-based organizations

33

contribute significantly to the sustainability of internationally funded humanitarian andcommunity assistance programs.
The experience with delivering emergency assistance to Burma in the immediate
aftermath of Cyclone Nargis gave the world a wider view of the difficulties that humanitarianorganizations face in such a hostile environment. At first the government obstructed thedelivery of emergency assistance into the country and onto the delta, spurring a major
migration of displaced people from the delta toward Rangoon and other parts of thecountry. Following the May 2008 referendum on the new constitution, the government
relented under severe international pressure—most notably from its Asian neighbors—andbegan facilitating the delivery of foreign aid into Rangoon and selectively allowing aid toflow onto the delta. However, local officials and military authorities continued to obstruct
the aid effort in many localities. In particular, access by Western aid workers was carefully
monitored. To address this problem, a Tripartite Core Group initiated by ASEAN andcomposed of representatives from Burma, ASEAN, and the United Nations was formed tocreate a mechanism for channeling international assistance to Nargis relief and facilitating
foreign aid workers into and within Burma.
Unfortunately, the post-Nargis experience for international aid agencies on the delta was
not replicated in other areas of the country, and in March 2009, the Burmese government
reverted to its policy of restricting access to foreign aid workers throughout the country,
as well as visas to enter the country, perhaps in preparation for limiting the presence of
foreigners during the coming elections. It is clear that common practices of human rights
violations, denials of basic freedoms, predatory land confiscation by the government, anda serious shortage of agricultural credit persist in the cyclone-affected areas, making therecovery effort more problematic than it needs to be. To compound matters, the military
regime also arrested and jailed a number of local activists for engaging in the relief effort.
A degree of naiveté on the part of international donors, the United Nations, and otheraid agencies was also apparent in egregious examples of large-scale misappropriation andloss of aid money. This dovetailed with the structural corruption in many of Burma’s
governing institutions. Prominent among these were the SPDC’s initial post-Nargis policyof requiring the conversion of foreign currency brought into the country into “foreignexchange certificates” (FECs). A device copied from China, FECs were devised in the
1980s to restrict the circulation of foreign exchange within Burma and to concentrate it in
the hands of the SPDC. An FEC has a nominal face value of $1 but, in practice, trades at a
discount to the dollar. This discount to the face value of aid money posed problems because
it meant that UN agencies and INGOs received less domestic purchasing power for their
25
The Tripartite Core Group acknowledged the $1.56 million figure in a press release, which essentially outlined theUnited Nations’ “case” on the matter. See Tripartite Core Group, “Myanmar and the UN Find Solutions to Foreign Exchange Loss of Cyclone Nargis Humanitarian Aid,” August 13, 2008, http://www.aseansec.org/21862.htm (accessed
February 2, 2010). For an alternative, independent account, see Matthew Lee, “In Myanmar, U.N. Loses 25% of Aidin Currency Exchange,” Inner City Press, July 28, 2009.
26
Tripartite Core Group, “Post-Nargis: Periodic Review II,” 2009, http://www.aseanhtf.org/periodicreview.html (accessed February 2, 2010).

34

foreign exchange than the U.S. dollar market exchange rate of the kyat. While the size of
this loss was and continues to be disputed, the discount at which FECs were trading to the
U.S. dollar during this period fluctuated between 15% and 20%. The United Nations has
admitted to a loss of $1.56 million during the seven-month period following Nargis.25
Nonetheless, the situation for international aid agencies improved somewhat in themonths following Cyclone Nargis. Many agencies and NGOs reported greater access toaffected areas, and “considerable progress . . . toward easing the hardships and physical devastation” of the cyclone was reported one year later.26 Other reports have been less sanguine,
pointing to ongoing restrictions on the movement of international aid organizations, continuing arrests and harassment of local aid workers, and rampant nepotism and corruption
in the awarding of reconstruction contracts. Despite all of these difficulties, the volume of
all forms of aid to Burma has increased dramatically since Nargis. Official humanitarianassistance, for instance, was valued at $420 million in 2008. After focusing initially on
relief and recovery, the Tripartite Core Group called for nearly $700 million in reconstruction aid for Burma, moving decidedly from humanitarian concerns to assistance aimed atpromoting economic development.27 The response from international donors, however, hasbeen tepid. This is largely attributable to skepticism about the efficacy of providing developmental aid and the difficulty of managing large-scale humanitarian assistance in a hostile
Burmese environment.
In light of these serious obstacles to aid effectiveness, the Task Force opposes unlimited
expansion of aid programs in Burma. The Burmese government has cultivated a negative
attitude toward foreign aid, widespread government-authorized corruption, and serious
macroeconomic distortions in the economy. Moreover, the military regime has deliberately
refused to use its considerable financial resources for the betterment of socioeconomic
conditions among the Burmese people. For example, Burma’s foreign exchange reserves
currently stand at just over $5 billion, increasing by around $150 million each monthfrom additional gas export revenues. To put this into the perspective of the aid debate, theTripartite Core Group’s request of $690 million would amount to just 14% of Burma’s
reserves, which is less than five months worth of gas exports.
More importantly, there is nothing that international donors can do under present
circumstances to improve the working environment for aid programs. As a result, external
players can achieve limited results through aid and economic assistance in Burma. As theInternational Development Committee of the British House of Commons noted,
Funding of aid work in Burma is not a case of “business as usual.” The risk offunding reaching an illegal and repressive military junta must be absolutely
minimised. Political and humanitarian “space” to carry out the process of poverty
reduction and humanitarian assistance is highly constrained. Capacity amongst
Tripartite Core Group, “Post-Nargis Recovery and Preparedness Plan,” December 2008.
United Kingdom, House of Commons, “Department for International Development Assistance to Burmese InternallyDisplaced People and Refugees on the Thai-Burma Border,” International Development Committee, HC 645-I, July25, 2007.
27
28

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partner organizations to spend aid money effectively is low. The coordination ofaid efforts is difficult and is currently done poorly. Overall, operating conditions
for aid agencies in Burma remain very challenging.28
The aid environment is likely to worsen during the period of the elections because
the government tends to see foreign—especially Western—aid workers as spies. Recently,
rumors have begun to circulate in Rangoon that the regime will suspend all NGO andINGO operations for six months during the election period. It remains to be seen how orwhether this will change after the elections, and decisions on wide-scale increases in aid
should be conditioned on observable improvements in Burma’s aid environment.
Focusing Assistance
The foregoing explication of the difficulties of delivering aid effectively in Burma is
not meant to suggest that U.S. humanitarian and community assistance programs should
be scaled back. On the contrary, the Task Force supports the expansion of these forms ofaid, but carefully and with moderation, as local conditions allow. As noted earlier, there
are now many more opportunities to engage effectively in humanitarian and community
development programs than there were in the past. Despite its many difficulties, the postNargis aid effort gave a dramatic boost to local community organizations, largely as a resultof citizen disillusionment of the regime’s lack of concern for their welfare. The United Statesshould continue to expand this space, with humanitarian need, democracy promotion, andgood governance as the overall guiding principles.
The U.S. government currently has a wide range of humanitarian and community
assistance programs in place in Burma, focusing on education, developing capacity at thegrassroots level, and improving capacities to address communicable and infectious diseases
and other health concerns. In the near term, the United States should also expand funding
to programs—both inside Burma and in Thailand—designed to equip Burmese with betterskills in negotiation, mediation, governance, and analytical and critical thinking that willcontribute to the development of democratic social behavior. Sorely lacking in Burma today,these qualities are critical to the emergence of a strong civil society and civilian government
in the years to come. The country’s military rulers have deliberately eroded the population’s
ability to organize and develop cooperative institutions. They have even outlawed
collaborative activity not authorized by the government and purposely sown mistrust andpitted people against each other. While outside forces cannot solve this problem, exposure
to alternative norms will encourage change, particularly in an environment of politicaltransition.
Over the longer term, U.S. assistance programs should focus, in a selective manner,on improving the technical skills of civil servants and the governance skills of elected
politicians. Enhancing these forms of U.S. assistance should be conditioned on a politicaltransition that will lead to reform in overall governance. U.S. humanitarian and community
development assistance to non-Burman nationalities should also be increased. While there

36are practical barriers to this, the United States should begin planning to overcome thesebarriers so that it can expand such assistance as circumstances allow. The non-Burman
nationalities must be prepared to take advantage of the possibilities presented in the new
constitution and engage directly in the country’s governance at both the national and local
levels. The United States should supplement cross-border programs for reaching minority
nationalities with programs inside Burma immediately. Such aid is urgently needed in the
pre-election period, and, as will be discussed later, there are mechanisms already in placethrough which it can be delivered reliably and speedily.
Ultimately, the humanitarian efforts of all external actors should endeavor to yieldcommitments from the Burmese authorities. All aid is fungible, and what the rest of theworld provides has the potential to simply release a similar amount of resources for the
regime to do as it pleases. The international donor community should tie aid provision to
expenditures by the military regime on its own citizens, whether as in-kind contributions or
cash allocations from the regime’s considerable revenues. Two other considerations need to
be uppermost, even in the delivery of humanitarian aid in Burma: First, transparency andaccountability are critical in such a corruption-rich environment. Donors not only must
look out for their own interests, but also ensure that the Burmese people are the primary
beneficiaries of aid. Second, foreign donors must be vigilant in ensuring that the aid they
provide will not prop up dysfunctional and abusive structures that harm the populationin either the short term or the longer term through projects that are not economicallysustainable.
Refugee and Cross-Border Aid
A tried and tested avenue for assisting many Burmese people is the provision of
aid to refugees and displaced people living outside Burma’s borders. The United States
already provides education training, capacity-building programs, health services, clinics,
and other organizational creation and support initiatives to Burmese refugees living in
Thailand. One especially innovative program in Thailand offers training and support
to Burmese journalists. Other educational programs focusing on critical thinking,mediation skills, governance, and other basic competencies are now emerging, and theUnited States should continue to support all of these efforts. A major advantage of theseborder programs is that they are particularly effective at reaching many of the ethnic
minorities in eastern Burma.
The United States also should continue to support the successful cross-borderhumanitarian aid programs dispensed mostly from Thailand. Such aid has proven to beeffective at reaching significant numbers of people in Burma. Cross-border aid also reaches
into remote border regions of Burma, many of which are conflict or postconflict zones.
The 5 million people living in these areas have even less access to health, education, andother services than other communities in Burma and very little in the way of economic
opportunity. The United States currently contributes approximately $4 million for crossborder aid into Burma. This aid is used by a number of highly effective NGOs to provide

37critical medical and other assistance. These NGOs meet high accountability standards andhave demonstrated absorptive capacities for increased scale. Indeed, these programs should
not suffer at the expense of expanding U.S. programs inside Burma; rather, they should
be slated for increased funding as well. Additionally, the focus of support from the UnitedStates should be expanded to other areas beyond humanitarian programs. A multitude ofissue- and rights-based organizations are operating cross-border, advocating on behalf of
their communities that are silenced inside the country.
Encouraging Economic Reform
The Task Force believes that the United States and the international community should
prepare to carry out a modest expansion of economic engagement with Burma if there
are concrete improvements in the aid environment and if credible steps toward economic
reform and easing repression are taken by the Burmese government. Engagement can beenhanced in two areas.
First, the United States and the international community should assist in preparing
a badly demoralized civil service for competent governance. Once known for its
professionalism and a high reputation in economic and statistical analysis, Burma’s
primary policy-making bodies are now only shadows of their former selves. This erosionof local expertise—the result of an older and highly educated generation of administrators
being replaced by casualties of Burma’s poor education system—raises the prospect that alack of administrative capacity and policy expertise could inhibit even a reform-mindedfuture government from engaging in the necessary restructuring. Likewise, data collection
capabilities in Burma have been greatly eroded, sometimes as a result of a deliberate policyof shielding fiscal and monetary mismanagement from public scrutiny. Unreliable economic
data constrain genuine economic reform, which must rely on mechanisms allowing
feedback, accountability, and transparency. Multilateral financial institutions—such as the
IMF, World Bank, and Asian Development Bank—as well as the policy agencies of theUnited States and other governments provide a means through which assistance in this area
can be provided. For all of the reasons outlined in this report, financial transfers or loans
should not be entertained until genuine reform is under way and the Burmese government
demonstrates a commitment to investing its plentiful resources in meeting basic needs;
however, there is much to gain from the provision of advice and training on these mattersat the appropriate time.
Second, economic engagement can be directed toward providing advice on how Burmashould manage its natural gas revenues and promoting accountability for government
spending. Resource “rents” such as these are difficult to handle in any political environment,
but the matter is especially vexing in Burma. The Burmese government has a trackrecord of disregarding the advice of international financial institutions (which have longrecommended that it properly account for gas revenues by eliminating the dual exchangerate), diverting funds through vast corruption and misguided spending priorities, andrefusing to permit the emergence of critical institutions such as an independent civil society

38and an independent audit body that could provide much-needed scrutiny over government
finances. Devices employed elsewhere to help contain the “resource curse,” including
revenue stabilization funds, public investment and infrastructure funds, and schemes toprovide for direct distribution of resource revenues to citizens, should be explored in Burma
if and when the government of Burma credibly commits to economic reform and an end torepression. The distribution of revenues is especially relevant to Burma in the light of thewidespread capital drought in rural areas and limited capacities for government-directed
spending to deliver meaningful change.
In addition, the United States and the international community can help create theconditions for economic reform in Burma by investigating and exposing where the country’s
gas proceeds are kept offshore and how they are utilized, relying on global anti–money
laundering rules to block any suspicious transactions and to freeze accounts linked tocorruption. Using the leverage of the global financial system in this way, the United Statesand other countries could then press Burma’s government to account properly for gas revenues
in its budget, redirect the funds to meet social needs, and create mechanisms that bringaccountability and transparency to this sector, which is critical to Burma’s economic future.
None of the above implies a naive belief that such initiatives and advice will be heeded.
Notwithstanding the absence of multilateral financial institutions, Burma has received
attention from a host of actors (official and otherwise) that have sought to provide advice
on economic reform over the years. Especially notable for its ambition and commitmentof resources to the task, an initiative was undertaken by the Japanese government to bring
together economic experts from both Japan and Burma to devise a step-by-step programof reform and reconstruction of Burma’s economy. When some of the recommendations
from this joint project were submitted to Than Shwe in 2001, he rejected them. The projectcontinued, however, and probably disappeared in 2004 with the arrest of General Khin
Nyunt, whose staff had led the effort on the Burmese side. Such has been the universal fateof these efforts—a pattern of willful isolation from the world of ideas. It is too early to say
whether the SPDC will be any more receptive to the advice offered during the late 2009 visitby Nobel laureate Joseph Stiglitz, under the auspices of the United Nations Economic andSocial Commission for Asia and the Pacific, which focused on addressing rural poverty.
MicrofinanceMicrofinance is another potentially useful form of economic aid provision in Burma. A
number of microfinance schemes in Burma currently exist, the largest and most potentiallytransformative of which are those managed by Pact, an NGO based in the United States,
under the auspices of the United Nations Development Programme. This scheme currently
has around 300,000 members in 22 townships and 3,600 villages. Pact dispenses small loans(the average amount is $32) that have the potential to transform the lives of their recipientsby allowing small-scale capital formation, consumption smoothing, and moneylender debt
retirement. In so doing, it employs most of the methodologies that have made microfinancefamous: peer group and progressive lending, weekly meetings, a focus on women borrowers,

39

motivational practices, and simplified techniques.
Rural Burma, which is experiencing a credit drought, is especially in need of microfinanceinstitutions and funding. By and large, well-managed microfinance institutions are suited
to negotiating politically difficult environments such as Burma’s and to meeting theminimum transparency standards for in-country aid. Microfinance provides aid that is:• Targeted to need—loans are initiated by the borrower• Small—lowers the incentives for corruption and makes accountability andtransparency easier• Based on issuing debt that must be repaid— limits the distortion of aid into
governance eroding windfalls
For Burma, a minimum environment for economic reform and the absence of government interference are essential to ensuring the success of microfinance in Burma (for thisreason, directly aiding the state-owned Myanma Agricultural Development Bank is nota useful option at this stage). Once the right conditions are in place, the United States
and the international community should support the development of these programs. The
most important area of assistance is to provide advice on how microfinance can be given alegal basis in the country’s banking system. Currently, microfinance in Burma functions
in a legal no-man’s-land. Not permitted to register as or in connection with formal banks,
microfinance institutions in Burma technically have no legal status. As a result, they are
acutely vulnerable to government expropriation, and foreign advisors are subject to expulsion. With appropriate modification and assistance, microfinance-specific legislation thathas been developed by a number of countries (such as the Philippines and Indonesia) could
be adapted to Burma. Efforts by the United Nations Development Programme to provide
assistance on this front in 2006 were stymied by Burma’s government, but in a genuine
reform environment, the matter could and should be revisited.
International assistance could also promote microfinance in Burma with capital. The
Pact microfinance scheme is currently greatly limited by the capital that it can employ
and, consequently, its ability to expand its loan portfolio (as are smaller NGO-based
microfinance institutions). One model for capital provision that can be adapted to Burmais the Microfinance Investment Support Facility for Afghanistan. This organization is awholesale fund (and quasi-regulator) for microfinance created by the World Bank in whatmight reasonably be regarded as an environment at least as challenging as Burma’s. Such afunding vehicle could also play a role in coordinating international aid in this context and,
when necessary, could act as a bulwark against the expropriation and misuse of funds.

Economic Sanctions
The question of economic sanctions on Burma polarizes opinion and generates much heateddebate. Indeed, the question now dominates all others when it comes to Burma’s relations
with the rest of the world. Unfortunately, this debate tends to cloud the actual causes of40

Burma’s economic crisis. In the process, it draws attention away from the true problems
that the country faces, the overwhelming majority of which are firmly located within its
borders.
Three essential truths are clear when approaching the sanctions question as it relates
to Burma. First, economic sanctions are not the cause of Burma’s poverty. Second, thebiggest “sanctioner” of Burma is not foreign governments or other external actors, but
the country’s own government and its misguided policies, which make Burma a highly
undesirable location to do business. Skeptics see sanctions as an obstruction to Burma’s
engagement in the world and a hindrance to the emergence of a commercial middle classthat could bring about political change. As noted earlier, such a view (fine in principle) is
problematic in Burma, where large-scale economic enterprise—especially that linked tothe international economy—is tightly controlled by individuals and entities connected tothe state. For this same reason, sanctions do far less damage to the average person in Burmathan is sometimes alleged. Most people are entrenched in an informal economy with few
links to the outside world and use traditional technologies and processes. Third, there is a
crucial distinction to be made between generalized sanctions that have a wide effect (suchas a general ban on all imports) and targeted sanctions that are tailored to affect particular
individuals, companies, activities, or industries without harming the population at large(such as financial sanctions that selectively block access to banking services by designatedpersons or entities).
As the new U.S. policy of pragmatic engagement with Burma announced in September
2009 clearly indicates, substantial changes to the sanctions program levied by the UnitedStates are dependent on whether the Burmese government shows concrete progress in
implementing a number of political and economic reforms. In the long term, if the Burmese
government begins to make credible changes, the Task Force believes that it is essential toexamine how a modification of some sanctions should proceed and how others may be
sharpened under certain circumstances.
To this end, the Task Force proposes a sanctions program (outlined in detail in Appendix
A) that sets out incentives designed to bring about change in Burma while, at the sametime, maintaining pressure against easy promises and regression by the country’s militaryleaders. As always, such a program depends on the future direction of Burma’s politicalleaders, who will remain the determining actors on all of these issues, and it is realistic
only in a reform-minded environment. Similar efforts have failed in the past, primarilyon the grounds that a sincere partner for dialogue could not be found in the Burmese
government.29 As long as the present leadership remains in power, this kind of scheme islikely to remain an unacceptable option in Burma. However, the proposal’s emphasis onpractical and measurable goals rooted in general principles may usefully serve to shift the29
The most prominent was the so-called Chilston Park initiative of the British Foreign Office in 1998, which involved
a hypothetical promise of $1 billion in aid in exchange for political concessions from the regime. Presented to the
Burmese government by the UN special envoy in 1999, it was pronounced unattractive by Aung San Suu Kyi andsummarily rejected by the SPDC.

41

emphasis from a “carrot and stick” approach to one in which the benchmarks are more
widely accepted and progress can be judged incrementally.

International Coordination and Collaboration
For the past 20 years, the United States has coordinated its Burma policy with a numberof international stakeholders. Generally, this has taken two forms. First, the United States
has strongly supported UN efforts to urge Burma’s military regime into tripartite dialogue
with the NLD and non-Burman minorities. Second, the United States has pressed othergovernments, particularly in the Asian region, to adopt economic sanctions against Burmaand to eschew engagement with the military regime. Neither of these efforts, however, hasproduced lasting progress. Although one UN special envoy did manage in 2000 to bring
Burma’s military leaders into direct discussions with the NLD and Aung San Suu Kyi, thediscussions did not grow into genuine political dialogue. The idea of tripartite dialogue
with democracy forces and non-Burman nationalities has been an anathema to the military.
Similarly, Asian countries have firmly resisted U.S. exhortations to adopt sanctions. Only
Western governments were willing to consider sanctions, but even these were not as far
reaching as those enacted by the United States.
The Obama administration’s decision to renew its coordination with international
partners in an effort to expand possibilities for collaboration is a welcome shift in the
United States’ policy toward Burma. As Assistant Secretary of State of East Asia and PacificAffairs Kurt Campbell testified before a U.S. Senate subcommittee in September 2009,
this collaboration will include expanded dialogue and interactions with key countries in
the region—namely, China and India—as well as greater coordination with ASEAN, theEuropean Union, Australia, Canada, Japan, and the United Nations to encourage theimplementation of political and economic reforms in Burma and to foster an atmospherein which new ideas are welcomed. The United States also should redouble its efforts tocoordinate its financial sanctions with Asian banking centers.
The United States should encourage the international community, especially theUnited Nations, to press the SPDC to engage in dialogue with the opposition and with
non-Burman ethnic minorities before the elections. Although Ibrahim Gambari, the UN
Secretary-General’s special advisor on Myanmar from 2006 until the end of 2009, reached
an impasse with the SPDC on tripartite dialogue and reconciliation, the Secretary-General
has recently indicated that he will be seeking a new special advisor to continue this effort.
The Task Force urges that, mindful of the urgency of pressing for dialogue, he choose a newadvisor quickly and carefully. Over the longer term, the United Nations can provide theessential umbrella for coordinating the efforts of key countries that may be able to influence
the course of Burma’s transition. To this end, the Task Force recommends that the UnitedStates encourage the United Nations to form a support group—consisting of itself, theEuropean Union, Japan, Australia, China, India, Indonesia, and, of course, Burma—tocoordinate efforts to encourage political and economic reform over the coming decade. This
group might be developed as a subset of the existing Friends of Burma/Myanmar group.

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The Task Force also believes that ASEAN should be viewed as a key venue for U.S.
engagement with Burma. The United States should participate more actively in ASEANhosted meetings, in contrast to its previous policy of disengagement as a way of punishing
ASEAN for admitting Burma into the organization. Moreover, the United States should
explore how ASEAN programs and coordination mechanisms can be employed to promote
both economic and political reform in Burma. Judging by the positive overtures toward
ASEAN made by U.S. Secretary of State Hillary Clinton at the ASEAN ministerial meetingin Phuket in July 2009, the United States has already signaled its intention to build a moreproactive relationship with the organization. For example, the new U.S.–Mekong Basincooperation initiative announced by Secretary Clinton in July 2009 could provide thebasis for addressing a host of environmental, health, and education issues in a regional
context. The Task Force strongly supports these positive steps toward improving relations
with ASEAN and encourages even greater engagement moving forward.
Similarly, ASEAN programs designed to promote regional economic integration
could form a basis for the advancement of economic reform in Burma. Indeed, some of
the most instructive examples of economic progress are those provided by Burma’s peers
and neighbors. Purpose-driven economic reform—such as openness to trade, greater
protections for property, and freedom for enterprise—is crucial for the success of ASEAN
countries in the region. Burma, on the other hand, has been the problem child within
ASEAN, resisting meaningful reform, while simultaneously flouting ASEAN’s goals ofcreating a stable, prosperous, and competitive economic space. Burma also has resisted
ASEAN’s pursuit of intraregional economic freedoms, encapsulated in its “Vision 2020”of a single market and integrated economic community. Therefore, the emergence of areforming Burma would be warmly welcomed beyond its borders.
U.S. coordination and collaboration with China, India, and Japan should also be
reinvigorated, with particular emphasis on good governance and economic reform. Suchefforts should include regional training programs for Burmese government officials andother educational programs designed to strengthen Burma’s human capital. For example,
Japan has worked closely with the Burmese government in the past to develop a detailed
plan for undertaking critical economic forms. This effort, however, failed to gain support
from General Than Shwe. Should, reform-minded officials emerge in the new government,
the United States should support the revival of this project and consider collaborating with
the Japanese to implement this project along with China and ASEAN.
One of the available means through which all countries could collaborate is theactivation of channels of advice for Burma from multilateral financial institutions, such as
those available through the IMF and World Bank. Doing so could help bring about somedesired changes in Burma. The United States holds the key to collaboration and cooperationon this front: It has the largest individual country voting share in these institutions—30
See Yuki Akimoto, “Opportunities and Pitfalls: Preparing for Burma’s Economic Transition,” Open Society Institute,2006, http://www.soros.org/initiatives/bpsai/articles_publications/publications/opportunitiespitfalls_20061115/
opportunities_20061115.pdf (accessed February 24, 2010).

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around 17% for the IMF and 16% for the World Bank. Few countries have sought torestrict the provision of advice from multilateral financial institutions to Burma. Therefore,
the Task Force supports greater efforts by the United States to relax these restrictions andto mobilize support to make changes, namely from the European Union, China, or othermembers of ASEAN. A focus on economic growth and the blanket application of reforms,
however, have failed to work in many countries, with disastrous effects in some cases. In
order to avoid losing control of development and poverty-reduction strategies and to makeassistance from international financial institutions most effective, Burma should have inplace a clear set of development objectives, a comprehensive social and economic policy
framework, and good governance principles and practices.30
The provision of advice and capital for microfinance has been identified as a possible
form in which aid could be expanded in a reforming Burma, targeted initially at agriculture.
But here, too, there is great scope for an internationally coordinated approach. This is mostobvious in the form of advancing capital (there is no reason why the United States shouldbear this burden alone), and we have many examples of international cooperation in thisarea through “multidonor trust funds” of various sorts, many of which are supervised by
the World Bank. But such cooperation is perhaps even more important in the context ofproviding advice on microfinance, and of models for possible replication.
For instance, one of the shining stars of the microfinance firmament is Indonesia’s
Bank Rakyat Indonesia (BRI) and its Unit Desa (village bank) system. The BRI combinestried and tested microfinance methodologies with extraordinary outreach (more than 30
million clients), vast savings mobilization, financial sustainability, independence frompolitical interference, and the provision of seed capital and life-changing credit to a great
many people who otherwise would not be able to get it. The BRI runs an International
Visitor Program for the training of staff from other banks and multilateral financial
institutions. Of course, the BRI is just one of a number of regional peer institutions that
could function as models for Burma. Others could include Bangladesh’s famed Grameen
Bank, while Thailand’s Bank for Agriculture and Agricultural Cooperatives is an example
of an institution with great rural outreach in an agricultural and geographic setting notdissimilar to Burma’s.
In terms of providing advice on a legal framework for microfinance in Burma, noted
earlier as a critical missing element in the country’s microfinance sector, international
coordinated assistance, by the likes of the Consultative Group to Assist the Poorest (anorganization housed in the World Bank but supported by a wide consortium of development
agencies and international NGOs) would be ideal. In short, the scope for international
cooperation in revitalizing Burma’s rural credit system is broad, and readily at hand.
One of the most pressing economic conundrums facing Burma today is the questionof how to deal with the foreign exchange earnings that are currently accumulating from its
significant energy exports. These should be providing the financial wherewithal for Burma’s
long-term prosperity, but at present, they are doing little more than fueling corruption andmisguided spending, such as the construction of the lavish new capital. Such a “curse”

44arises from the mismanagement and misconduct of Burma’s leadership, which should be
exposed and challenged through global money laundering investigations. For the future,some form of national consensus needs to be established as to how Burma’s gas revenues
should be managed and used. The priorities must be ensuring that gas funds are reported
fully, that they are directed to meet urgent social needs, and that spending is accounted forproperly.
One approach—when Burma has a government that is prepared to reform accordingly—would be to work with the government to deposit gas proceeds into a social investment fund managed with active international participation and according to international standards. Similarly, international coordinated action can take the form of easinga reforming Burma into the Extractive Industries Transparency Initiative (EITI), a multistakeholder initiative bringing together governments, companies, and civil society that
promotes the simple idea that companies publish what they pay for resources and governments disclose what they receive. Support for implementing EITI has been provided toa number of countries by the World Bank. EITI is limited by the fact that it addresses
only the transparency of revenues, and does not touch on the transparency of spendingor public accountability more generally. Hence, complementary steps are needed, including efforts to promote independent scrutiny of government budgets and spending—for
example, by training civil society analysts and advising on the creation of an independent
audit body. Each of these key aspects can be advanced through international cooperation
to improve Burma’s long-term prospects.
Because the most comprehensive sanctions on Burma are those levied by the UnitedStates, this report has devoted significant space to examining the relationship between
sanctions and the Burmese economy and devising a mechanism through which they can beused—not just to send a message to Burma’s present leaders, but also as leverage to promotechange. This presents an opportunity for international collaboration and coordination:• First, the procedure through which it is proposed that the criteria of theMillennium Challenge Corporation (MCC) be used to review sanctions in
response to genuine reform in Burma need not apply solely to the United States.
Although the MCC is a U.S. body, it relies for the construction of its metrics onan array of institutions and organizations that are independent of the UnitedStates or any other government. In other words, the MCC processes are capableof universal application and, accordingly, a coordinated international response toreal reform.31• Second, among the existing sanctions that are likely to remain for some time,such as those on financial transactions, greater coordination is necessary to ensure
against the creation of unexpected and unintended outcomes, as well as damage
to jurisdictional arbitrage. To this end, the United States, European Union,31

See details in Appendix A.

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Australia, and other countries that sanction financial flows through lists of specificindividuals and entities should coordinate these lists and remove anomalies. In asimilar vein—and should increased financial sanctions prove necessary in the faceof ongoing SPDC abuses and resistance to reform—greater comprehensivenessand country coverage of these measures will be required. Such extra measures
will impose particular responsibilities on financial centers within the Asia-Pacificregion to coordinate their prudential, money laundering, and other policies
toward financial transactions involving Burma.
Finally, the new constitution provides for the SPDC leadership to be absolved of any
responsibility for their actions while in power, perhaps in recognition that there have beencalls to hold senior Burmese officials responsible to an international authority for theirtransgressions against the Burmese people. The Task Force is divided on this issue. Some
believe that it is up to the Burmese people to decide how to deal with the question of
accountability. They feel it would be counterproductive for the United States to advocate
accountability to an international authority, so long as it recognizes the necessity of working
with the military leadership to bring about political transition. Others believe that theUnited States should press for the current Burmese leadership to be brought before aninternational court of accountability for human rights violations, particularly if the SPDC
does not respond positively to U.S. overtures and if human rights conditions in Burmacontinue to deteriorate.

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Conclusion: U.S. Policy Options Based on
ChangeThere are great uncertainties about the course that governance in Burma will take overthe near and longer term. The United States must approach policy adjustments with carefulconsideration of how the instruments at its disposal—including both the engagement andsanctions sides of the equation—can be employed most effectively to encourage reform anddemocratic governance. Going forward, it will be useful to consider distinctions based onchange in Burma for framing U.S. policy recommendations. Therefore, we conclude with areiteration of the Task Force’s recommendations, which are organized into to three distinct
stages: (1) measures to be pursued now; (2) additional measures to be implemented if andwhen the United States begins to see indications of change on the part of the Burmese
leadership; and (3) actions to be undertaken after real progress has been demonstrated ona sustained basis.
Stage 1: Measures to be pursued now
Between now and the presumed 2010 elections, the SPDC is likely to be preoccupied
with election preparations to ensure that it achieves desired results, and it is unlikely todepart significantly from its chosen course. Its foreign policy will be aimed at creating atleast the appearance that the international community recognizes the legitimacy of theelections. In fact, it is quite possible that the SPDC’s primary objective in engaging with
the United States is to demonstrate to its own population that the United States endorses its
seven-step process toward democracy. The United States must tread carefully through thisminefield, avoiding the appearance of sanctioning or legitimizing a flawed election process,while pressing Burma’s military leaders to carry out credible elections.
Although there is no concrete evidence to suggest that the SPDC will respond positively
to the central U.S. message on engaging in tripartite dialogue, releasing political prisoners,
and allowing fair and inclusive elections, the United States must continue to press strongly
on dialogue and inclusivity before the elections, not only with SPDC leaders, but also with
Burma’s Asian neighbors and the United Nations. Ultimately, the way in which the SPDC
handles the elections will have a critical impact on how the U.S. government deals with its
results and the government it brings to power. It also will provide an early assessment in
the United States of the relative merits of engagement with Burma and, in that respect, will
influence the future direction of U.S. policy.
At present, the United States should focus on capacity building for Burma’s civil society
organizations, including private education and health institutions. This would constitute aform of expanded engagement with other elements of Burmese society, in addition to thegovernment, political parties, and ethnic minority leaders. U.S. assistance already includes
many such programs, which should be expanded over the coming year to make capacity

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building an explicit adjunct to current humanitarian assistance. Enhanced Fulbrightand Humphrey Scholar programs would be another element of capacity building. U.S.
support for training programs both inside Burma and in Thailand that are designed tofoster negotiating skills, mediation, critical thinking, and analytical skills also is important.
An emphasis on capacity building would address a critical need in Burma and help lay afoundation for expanding these programs after the elections, when they will be key toachieving change and reform.
Another important issue for U.S. policy during the pre-election period is the potential
for the SPDC’s election strategy to exacerbate internal instability that could spill over into
China, Thailand, and Bangladesh. Until the status of the armed cease-fire groups has been
peacefully resolved, the threat of renewed and even more serious violence will continue tounsettle Burma’s neighbors. In particular, the United States should continue to urge the
SPDC and the cease-fire groups to seek a negotiated solution, and it should consult closelywith China and Thailand. The United States should continue to urge Burmese officials toprovide assurances that the SPDC is abiding by its commitment to refrain from acquiring
nuclear weapons technology and to UN Security Council Resolution 1874, which prohibits
the receipt of arms supplies from North Korea.
The United States also should begin to explore with Burma’s Asian neighbors andinternational financial institutions ideas for encouraging economic reforms and instituting
training programs to build governance skills among civil servants. In addition, thegovernments of Asian countries investing in Burma, especially China and India, should beapproached about the desirability of requiring large infrastructure projects to proceed only
on the basis of thorough, independent social and environmental assessments and appropriate
measures to incorporate human rights safeguards, skills training, and environmental
sustainability elements into their projects.
As for the elections, the United States should avoid direct participation in election
monitoring, because it could be seen as conferring legitimacy on a seriously flawed election
process. However, the United States should facilitate the provision of educational materials
on election and parliamentary processes to groups in Burma and on the Thai border thatare conducting voter workshops and seminars, with a particular emphasis on state/divisionlevel elections, which may become important to ethnic minorities. Voice of America andRadio Free Asia also could help educate voters.
Finally, the United States should maintain its full set of existing economic sanctions
for the time being, as it has indicated that it plans to do. At the same time, it should
work with other countries and institutions to investigate bank accounts and financialtransactions tied to Burma’s government in order to detect misappropriation of thecountry’s gas proceeds. Such efforts will help to combat corruption; position the UnitedStates to further target and tighten financial sanctions, if circumstances warrant; andprovide important information that can be used to promote key economic reforms in the
future.

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Stage 2: Additional measures to be implemented if and when the United States begins
to see indications of change on the part of the Burmese leadership
U.S. policy during this period should be designed to assist the process of developing
more democratic institutions, both inside and outside government, and to encourage
government capacity building. The key indicators for U.S. policy will be whether the
new government is at all interested in relaxing political restrictions, instituting economic
reforms, and improving human rights. If there is no movement on these fronts, there
will be little room for improving U.S. relations with Burma, and, in fact, pressure in the
United States for tightening sanctions and other punitive measures likely will follow. In
such a scenario, U.S. policy essentially would be left in pre-election mode, with limited
engagement and assistance confined largely to humanitarian, community development,
and limited capacity-building programs.
If a different scenario emerges that includes the release of political prisoners, including
Aung San Suu Kyi, and a demonstrated tolerance for expanded political activity, it should
open the way for a much more active role by the United States in assisting with capacity
building, governance training, and international efforts to encourage economic reforms.
One priority should be the development of an appropriate mechanism for ensuring thatrevenues from the sale of natural gas are properly repatriated and applied to urgent national
needs. U.S. policy during this period should also be aimed at expanding assistance tothe minority nationalities. Examples of specific measures that would advance these goals
include the following:• Creating bilateral and multilateral training programs for government officials,
particularly in ministries involved in economic management• A llowing international financial institutions to assist in planning economic reforms• Investigating bank accounts and financial transactions to detect and combat themisappropriation of Burma’s gas proceeds• Encouraging the repatriation of gas proceeds and their appropriate allocation tomeet public needs—for example, by advancing concrete initiatives to address thetransparency of revenues and spending, to create well-managed and accountablestructures for social investment that meet international standards, and to promote
the creation of a qualified and independent audit body• Creating human rights, democracy, and governance training programs focused onparliamentary representatives (including elected members and military personnel
appointed to parliament) and civil servants• Designing special governance training programs for elected and appointed
officials in state-level government, aimed especially at minority nationalities• Upgrading diplomatic representation to ambassador in both capitals

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Assuming that Burma’s agricultural sector will continue to suffer from a chronic deficit
in lending facilities for small farmers, the United States should consider offering microcredit
programs for the farming sector in order to encourage the government to establish a legal
basis for microcredit in its banking system, as described earlier in this report, and to
devote more government resources to agricultural credit. In fact, this is an example of how
assistance might be used to leverage positive government change.
Regardless of the direction that the new government takes, this period would be
an appropriate time for the United States to encourage the United Nations to form aninternational support group consisting of the United States, the European Union, Japan,
China, India, Australia, Indonesia, and Burma. The group should coordinate its members’
mutual efforts to advance Burma’s transition, both politically and economically. It also
should bring in other governments and international institutions as appropriate to focus
on specific tasks, but its main objective should be to coordinate and demonstrate collective
encouragement of reform, protection of human rights, and good governance.
We should expect that conditions in Burma, with regard to both quality of life andpoor governance, will be much as they are today. It will continue to be difficult to deliver
assistance reliably, the government still will attempt to control and divert assistance,
corruption will be endemic, and many forms of assistance will continue to be viewed as
unwelcome external interference. This will impose practical limits on the degree to which
the United States (and the international community) can expand assistance programs,
reinforcing the importance of maintaining robust assistance and training programs in
Thailand. To the extent that the United States can develop collaborative efforts with China,
Japan, and ASEAN, particularly with regard to economic reform initiatives, it will increase
the possibility of achieving progress, because advice and support from these countries, rather
than Western governments, are likely to be more welcome by the Burmese leadership.
Stage 3: Actions to be undertaken after real progress has been demonstrated on asustained basis
If a second round of parliamentary elections is held in 2015, this could provide a morereliable measure of political progress in Burma. By this time, the civilian population may
have a better idea of whether the new government is making sincere efforts to serve thepublic interest, whether it is safe to run for office and engage openly in political activity,
and whether a new generation of socially responsible political and military leaders may be
emerging. It is, of course, impossible to provide informed answers to these questions at thispoint. Suffice it to say that U.S. policy should remain predicated on encouraging positivechange by balancing engagement with the most effective and well-targeted sanctions.
In the absence of serious progress, engagement with the government can expand
only modestly, and sanctions will remain more or less as they are now or, in the worst
case, could be tightened. On the other hand, if there is definitive progress both politicallyand economically, engagement will expand and sanctions should begin to diminish. The
investment, trade, and financial sanctions currently in place can be gradually eased in50

response to positive developments, including during regular reviews of relevant legislation
scheduled on an annual basis. In fact, sanctions can be effective only if they are carefully
calibrated to encourage and reward reforms. The United States probably would want tokeep targeted financial sanctions in force, in order to deal with continuing corruption andattempts by the military and its cronies to control the economy and manipulate government
resources.
If things progress in the longer term, the United States may begin to consider selective
development assistance, health and education assistance in cooperation with government
ministries, significantly expanded outreach and public diplomacy programs, educational
exchanges, and many other elements of normal relations with an underdeveloped country.
In such a scenario, USAID should develop an official bilateral relationship with the Burmese
government, as is common practice. Economic reform should remain a priority, and theUnited States should begin to focus on legal reform to address civil rights, economic law,and corruption. It also might eventually be possible to provide assistance and training
to parliamentary and legislative organizations. All of these efforts should place special
emphasis on minority nationalities to facilitate their full participation in the country’s
political and economic development.
In the final analysis, the United States, on its own, can have only a limited impact on thecourse of political development in Burma, and should not overestimate its powers to do so.
Under the best of circumstances, the social, political, and economic development necessary
to support stable democracy will take decades to achieve. The chances of instability andinternal strife as the country goes through this process are very high. Reform will require
a concerted and coordinated effort by the entire neighborhood and the international
community more broadly to keep this process moving forward. The United States would
be best advised to make collaboration with other concerned governments and international
institutions the centerpiece of its policy toward Burma over the longer term.

51

Appendix A: A Mechanism for Assessing
and Appropriately Adjusting Economic
Sanctions on Burma
32

This proposal recommends a program of sanctions and potential trade-offs based on theobjective criteria set out in the “Ruling Justly” indicators of the Millennium Challenge
Corporation (MCC).33 The MCC was established by the U.S. government in 2004 as a vehicle
for channeling aid (appropriated annually to the MCC by Congress) to countries that havein place the policies and institutions that make such aid effective. The MCC groups thesepolicies and institutions into three broad categories: “Ruling Justly,” “Investing in People,”and “Encouraging Economic Freedom.” Indicators that measure the degree to which these
activities are successfully in place are brought together in a country “scorecard.” The scorecards
determine a country’s eligibility or ineligibility for MCC funding. The indicators are judged byorganizations independent of the U.S. government employing public data, and they express acountry’s performance relative to its peer average. With respect to the “Ruling Justly” category,
the relevant indicators and the organizations scoring them include the following:
Civil liberties—rated according to the independence of the press and the
judiciary; freedom of assembly and organization; freedom from arbitrary arrestand imprisonment; the freedom to marry or not to marry; and the freedom tochoose where to work and live. Assessing organization: Freedom House
Political rights—rated according to the existence of free and fair elections; fairelectoral laws; the right to organize political parties; the degree of participation
by minority groups in decision making; and the freedom to seek politicalrepresentation. Assessing organization: Freedom House
Voice and accountability—rated according to the accountability of government
between elections; constitutional mechanisms for the transfer of power; freedomof speech; the freedom of civic groups and NGOs from government interference;and the degree of access to public information. Assessing organization: World Bank
Institute
Government effectiveness—rated according to the independence and competenceof the civil service; the efficiency of revenue and expenditure management; the extent
of bureaucratic delays; institutional sustainability; the transparency with which
taxes are levied; the adherence of spending to the national budget and the degreeof consultation in its formation; and the provision of accurate statistics relating tobudgetary and monetary issues. Assessing organization: World Bank InstituteThis proposal was written by Sean Turnell, an advisor to the Task Force.
These indicators (and the relevant source for all that follows in this section) are set out in Millennium Challenge
Corporation, Guide to the MCC Indicators and the Selection Process, Fiscal Year 2009 (Washington, DC: MCC, 2009).
32
33

52

Rule of law—rated according to the degree to which laws are observed by,among other entities, the police, government officials, and political leaders; theprotection of private property rights; the impartiality of the legal system; thedegree of public confidence in the police and the judiciary; the enforceability ofcontracts; civilian control of policy; and military and internal security throughdemocratic institutions. Assessing organization: World Bank InstituteControl of corruption—rated according to the degree to which corruption exists
at all levels of government; the extent of cronyism and nepotism in government
appointments; perceptions of corruption and the attractiveness of a country toinvestment; and the degree to which government officials are liable for prosecution
and the extent to which victims of corrupt decisions can seek redress. Assessingorganization: World Bank Institute
Burma currently scores poorly on all of these indicators. In order to qualify for MCC
funding, a country must score at or above the median of its country-income peers. Expressed
as a percentile ranking, this median is 50%, with 100% representing the best country scorein an income-peer set, and 0% the worst. The failure of Burma’s leaders to “rule justly” iscomprehensive, with percentile rankings of 0% for political rights; 4% for civil liberties;
4% for control of corruption; 7% for government effectiveness; 14% for rule of law; and 1%
for voice and accountability.
In the context of sanctions on Burma—and the creation of a process through which
they can be assessed, recalibrated, and, where appropriate, relaxed or intensified—the MCC“scores” provide a useful benchmark against which change in Burma can be scaled andjudged. For instance, positive movements in Burma’s scores, especially as they approach(or exceed) the crucial 50th percentile ranking, could justify the step-by-step lifting of
sanctions. Because the MCC process is symmetrical in its scoring of “regression” as well as
progress, it also provides an objective scale against which the tightening of sanctions could
be considered. However, the process for utilizing the MCC criteria to consider relaxing
sanctions on Burma should not be automatic, or triggered by some numerical score.
Discretion and flexibility on such matters must remain with the U.S. government, lest
opportunities to encourage progress, not otherwise counted in scores that rely on alreadyestablished outcomes, are missed. Though the process of evaluating sanctions on Burma
will always be difficult and controversial, this can be minimized by following a procedurethat is transparent, objective, and relatively simple. The MCC’s “Ruling Justly” criteria
provide for such a process.
If the need arises to intensify sanctions (a scenario that, as the sentencing of Aung San
Suu Kyi and other recent acts of internal suppression demonstrate, cannot be discounted),
the critical issue is to ensure that any measures have a minimum impact on the “average
citizen” in Burma. Financial sanctions largely fulfill this criterion while, at the same time,
sending the right message to the right people. In this light, the Task Force proposes that
the United States and other governments leave open the option of extending financial
sanctions in a way that would effectively prevent money that presently evades international
53

injunctions against the Burmese regime (as well as questionable entities within Burma)
from accessing the international financial system.
One way of doing this would be for the United States to apply so-called thirdparty sanctions under Section 311 of the USA PATRIOT Act. This act has already been
employed in the context of Burma (see Appendix C), but here, the idea is that the act would
be invoked to target banks in third countries that provide financial services to Burma’s
regime and connected parties. This approach was employed against the Macau-based
Banco Delta Asia and its money laundering activities for North Korea. The action taken
against Banco Delta Asia prompted more than 20 other banks (from Singapore, Mongolia,
Japan, Vietnam, and China) to suspend their own links with that organization, and hencewith North Korea. More recently, the U.S. government, largely through the actions of
the Treasury Department, applied considerable pressure to foreign financial institutions
doing business in Iran, citing the risk that certain transactions might facilitate nuclear
and weapons proliferation activities. As a result, at least 40 foreign banks have stopped
transactions with Iranian accounts. Should circumstances warrant it, the U.S. government
could engage in a similar effort to reach out to third-country banks, in particular totarget transactions involving Burma’s generals and others responsible for corruption andrepression. Meanwhile, the United States should gather intelligence on the SPDC’s foreignbank accounts and financial movements, especially those relating to the oil and gas sector,
so that it will be in a position to tighten targeted sanctions should this be necessary.

54

Appendix B: The Current Trajectory:
2010 Elections and the Economics of theConstitution
34

In 1990, the SPDC announced that it would not seat the newly elected parliament until
a new constitution could be written. In the ensuing years, the SPDC worked fitfully on thecreation of a constitution that would preserve as much military control over the politicalsystem as possible in a multiparty parliamentary system. After languishing for years in astalemate with the regime’s political opposition and ethnic minorities, the constitutional
effort suddenly came to life in 2004, when Burma’s Asian neighbors pressured the regime tofollow through on promises made in 1988 to return the country to multiparty democracy.
Responding to this pressure, the regime railroaded a new constitution through a National
Convention that included selected representatives of non-Burman ethnic groups, but
excluded the NLD and other opposition parties. In May 2008, the regime brought the new
constitution to a national referendum in the immediate aftermath of Cyclone Nargis andannounced that parliamentary elections would be held in 2010.
Since the promulgation of the constitution, the military leadership has been laying the
groundwork for the complex multiparty elections called for in the constitution. They also
are attempting to ensure that the SPDC will be able to maintain strict control over theprocess. They are determined not to repeat the experience of 1990, when they dramatically
miscalculated the dynamics of the parliamentary elections. Despite government efforts tomanipulate the vote by harassing opposition parties and restricting their ability to campaign,the 1990 elections resulted in a resounding victory for the NLD. Although an election law
spelling out the detailed rules for the 2010 contest has not yet been published, a variety ofgroups are already beginning to form the rudiments of political parties to contest the elections.
The popular expectation is that government-sponsored parties will dominate the elections,with only a minimum of seats going to nongovernment and nationality-based parties.
If the 2010 elections proceed as outlined, they stand to produce a new national parliamentand 14 state and regional parliaments. All of these parliaments would have a 25% uniformed
military membership appointed by the commander in chief, and a large percentage of thepeople running for civilian seats in the parliaments may be former military, hand-pickedby the government. Most of the senior military in the SPDC, except perhaps the top twogenerals, are likely to emerge as ex-military senior officials in the new government. Reports
from inside Burma suggest that, with the retirement of the current SPDC generals, themilitary retirement age of 60 will once again be enforced, in which case the new commander
in chief could 55 years or younger—some 20 years the junior of current top leaders.
Despite the heavy military and ex-military overlay of the new government, the elections
34

This analysis was written by Priscilla Clapp and Sean Turnell, advisors to the Task Force.

55

could bring a cadre of civilians to office and restore some of the country’s political life. For
example, aside from government-inspired parties and candidates, at least one independent
democratic political party (although not the NLD) has announced its intention to run,and a number of nationality-based parties are preparing to form. Judging by the regime’s
handling of the constitutional referendum in 2008, however, it is highly unlikely thatthe 2010 elections will be free and fair. Nonetheless, it is incumbent on the international
community to insist that only free and fair elections can produce credible results.
The 2008 constitution is not simply a creature of the SPDC. Many, if not most, of its
provisions were adapted from the 1947 and 1974 constitutions. Many of the provisions thatoutside observers have attributed to the control mentality of the military leaders have been partof the Burmese political makeup for decades and reflect traditional rules of Burmese society.
By and large, the new elements in the 2008 constitution are provisions for the uniformed
military to participate directly in and largely control the political process. Another featureof the new constitution is a set of provisions establishing state and regional parliaments andoutlining intricate rules for allowing non-Burman nationalities to be represented at this andthe national level. Many Burmese expect that most of these non-Burman representatives will
not be freely chosen, but rather will be anointed by the regime.
Although there are opportunities for greater participation by non-Burman nationalities
in the new government than has been the case in the past, the new constitution is not
attractive or acceptable to the non-Burman nationalities, particularly among cease-firegroups and those who are still engaged in active insurgency. Many of their concerns andrequests were not taken into consideration by the SPDC, and agreements with the armed
cease-fire groups stipulating that the matter of their arms would be settled after the elections
have been willfully ignored by the SPDC.
The regime is now requiring that the cease-fire militias become part of the national
border force under the command of the Burmese army before the elections take place.
Several of the groups are resisting this plan and refusing to participate in the elections. To
illustrate the full extent of its determination, the regime recently attacked the leadershipof the Kokang cease-fire group, sending more than 30,000 ethnic Chinese refugees into
China’s Yunnan Province. The regime subsequently negotiated with the other cease-firegroups, although it maintains a threatening military presence around their areas. The
attack on the Kokang capital has strained SPDC relations with China, but the generals
seem to have expected this. Beijing is urging both the SPDC and the cease-fire groups tonegotiate a peaceful solution and to avoid letting this dispute delay the elections. If theregime fails to reach a compromise with the Wa and the Kachin and resorts to force, it islikely to provoke a serious conflagration that will cause a strong reaction from China, andperhaps even India, which could destabilize the region.
Even if the question of the militias can be resolved peacefully, the cease-fire groups
will continue to have grievances with the regime, as the new constitution disenfranchises
them in other ways. First, only six of the original 17 groups were granted autonomous areas.
Furthermore, the size of these areas was reduced from what was originally set out in the56cease-fire agreements. Second, the constitution calls for the military to have a strong role in
the governance of the cease-fire areas, which is likely to be a continuing source of tension andresentment. Finally, the constitution does not provide the same degree of self-administrationand economic independence for the cease-fire groups as that allowed under the originalcease-fire agreements. Dissatisfaction with the new government could make these groups a
continuing source of instability along the Chinese and Thai borders and possibly in Burma’s
urban areas. The lack of economic incentive also may encourage the border groups to become
more economically aligned with China and Thailand, a trend that is already well established.
With regard to the seven states that are named for non-Burman nationalities, the
new constitution could give them much more responsibility for their own affairs than is
now the case, particularly in the long term. Once they learn the rudiments of governance,
it may be possible for the residents of these states to begin expanding control over theirown affairs. A number of non-Burman groups are already studying the possibilities of the
new constitution and exploring the responsibilities of self-governance. In the Shan State,
however, the constitution appears to be deliberately diminishing the power and influenceof the majority Shan national group. The constitution calls for the creation of five selfadministered zones for non-Shan cease-fire groups and provides other nationalities withat least 100,000 people nationwide to have their own parliamentary representatives andministries in the state government. Considering the many minority groups residing in the
Shan State, the new state parliament is likely to see a proliferation of nationality-based
administrative bodies, potentially diluting the influence of the Shan majority population.
The possibilities of the new constitution ultimately will be determined by how the
new government interprets its provisions. Despite the enormous detail in the constitution
devoted to how the government should operate, there is still wide room for interpretation. For
example, the constitution calls for the elimination of the SPDC as soon as the new parliamentis seated. However, this does not preclude the possibility that senior SPDC generals could
insert themselves into formal or informal positions that are not identified in the constitution.
Furthermore, the current structures of the SPDC government (aside from the council itself),along with its laws and regulations, are to remain in place until the new government replaces
them. This could be a very long process, and one that leaves the population caught between
ostensibly competing laws—the seemingly more liberal provisions of individual rights andfreedoms contained in the new constitution, on the one hand, and the archaic, decidedly
undemocratic laws and judicial system currently in place, on the other.
For foreign aid donors and international institutions, a troubling provision in theconstitution is the requirement that any recipient of assistance from a foreign entity(governmental or nongovernmental) is ineligible to run for parliament. If interpreted strictly
to include all forms of foreign assistance, the provision could prohibit most people fromrunning for office. If used selectively against liberal candidates whom the authorities wish
to keep out of government, the provision could seriously complicate current aid programs
aimed at empowering local civil society organizations. Moreover, the provision could also
be used against business leaders who have received investment income from foreign sources.

57

A number of such provisions exist in the constitution, reflecting the Burmese military’s
tendency toward xenophobia, which will have to be addressed as the country redefines its
relationship with the international community in the years ahead.
Regardless of the degree to which the regime attempts to control the new politicalprocess, because of the complexity and the number of parliamentary seats that must be
filled, the elections will require a degree of political activity that has not been allowed for
decades. Perhaps the NLD, which has kept the political flame alive for the past 20 years atgreat personal cost, will be able to reinvigorate its party operations, if it decides to participate
in the elections. If it decides not to participate, the legacy of the NLD nonetheless willcontinue to inspire an independent democracy movement in Burma.
Looking out over the next 10 to 15 years, the military could find it more and moredifficult to control its primacy in the political process. For example, even assuming that the
government’s Union Solidarity Development Association (USDA) becomes the vehicle forcontrolling the civilian side of the government, with time, the USDA is likely to developinterests in the political process separate from the uniformed military. Furthermore, the
USDA is not likely to remain a nationally cohesive organization at the state and divisionlevels. The key question is whether the military will refrain from reimposing martial law andallow the new government to survive long enough to develop its own legitimacy and strength.
With the appropriate instruments and coordination, the international community can play asubstantial role in buttressing the survival of elected civilian government in Burma.35

The Economics of the New Constitution
Constitutions are not primarily economic documents. As statements of fundamental values
and as templates for the rational organization of society, they incorporate ethics, morals,
aesthetics, religious belief, nationalist sentiment, historical and cultural memory, communal
imagining, and any number of considerations (including prescribed mechanisms throughwhich existing rulers aim to stay in power) beyond economics. Nevertheless, it is a country’s
economy—and the extent to which this produces a surplus above subsistence—that allows,
disallows, and otherwise shapes constitutions. Burma’s 2008 constitution is no exception.
The most important “economic” aspects of Burma’s new constitution are contained in
Chapter I, which details the “Basic Principles of the Union.” Among these, the most criticalare Articles 35 and 36:(35) The economic system of the Union is market economic system(36) The Union shall:		(a) permit all economic forces such as the State, regional organizations,cooperatives, joint-ventures, private individual, so forth, to take part ineconomic activities for the development of the national economy;35
For further analysis of the constitution, see the International Crisis Group, “Myanmar: Towards the Election,” Asia Report No. 174, August 20, 2009, http://www.crisisgroup.org/home/index.cfm?id=6280 (accessed February 2, 2010).

58		(b) protect and prevent acts that injure public interests through monopolizationor manipulation of prices by an individual or group with intent to endanger faircompetition in economic activities;		(c) strive to improve the living standard of the people and development ofinvestments;
		(d) not nationalize economic enterprises;		(e) not demonetize the currency legally in circulation.

A number of implications emerge from these Articles, most obviously the declarationthat Burma’s economic system will be market based—which stands in great contrast
to Burma’s doctrinaire socialist constitution of 1974. Clause (b) echoes old concerns ofmonopolies and manipulation that resonate through modern Burma’s founding 1947
constitution and its colonial anxieties. The item is not necessarily problematic.
Also interesting in light of Burma’s past are Clauses (d) and (e). Such “negative” pledges(i.e., declaring that the state will not do something) are not unusual in constitutions,36 but
here, the clauses evoke Burma’s tortured economic history. In the past, enterprises were
nationalized, and episodes of currency demonetization became characteristic of the country.
Whether these assurances in Burma’s latest constitution can be trusted is open to great
doubt. Burma is not a country where the “rule of law” prevails or where the rights of thepeople to private property are respected. Burma’s military leadership is hardly constrainedby formal legalities. Given the obvious incentives, there is little reason to believe this willchange in the absence of profound political reform. Secure property rights, in short, will
not be established in Burma simply by constitutional assertion.
Other sections of the new constitution also cast doubt on the extent to which market
relations will prevail in Burma, especially over the presumptions of the state and its organs.
Of particular significance is Article 37:(37) The Union:		(a) is the ultimate owner of all lands, and all natural resources above and below
the ground, above and beneath the water and in the atmosphere in the Union;		(b) shall enact necessary law to supervise extraction and utilization of State
owned natural resources by economic forces;		(c) shall permit citizens right of private property, right of inheritance, right ofprivate initiative and patent in accord with law.
Clause (b) is not contradictory to a market economy—similar preeminent extraction
rights of the state exist in most countries, and Clause (c) would be foundational if it wasapplied in practice.
36

The injunction in the U.S. constitution against the establishment of a state-supported religion is one of the most well known

59

The most problematic provision is Clause (a) of Article 37. Clause (a) is a significant
barrier to transformational investment by genuine private sector actors in Burma, especiallyin the agricultural sector. Article 37 is little more than a continuation of the existing land
title arrangements in Burma, which are the progeny of the Land Nationalisation Act of1948. Under these provisions, individuals are eligible for 30-year inheritable use rights onrural land, with such rights determined by village and regional-level land committees that
also determine whether the land is used “productively.” Land cannot legally be transferred
between unrelated individuals. This also means that land cannot be used as collateralon loans and denies Burmese cultivators the incentive and security to invest or improvetheir farms. The SPDC’s practice of engaging in arbitrary land confiscation only makes
a mockery of such land rights that exist on paper. The importance of this issue cannot be
overstated. According to the Food and Agriculture Organization of the United Nations,the ability to buy and sell title over land is a fundamental economic “right,” the provisionof which for Burmese agriculture is the “key to sector development.”37
Finally, the constitution assigns economic policy-making oversight to a “Financial
Commission.” The president serves as the commission’s chair, and members include thevice presidents, attorney general, auditor general, the chief ministers of the regions andstates; the chairperson of the Council of Naypyidaw; and the minister of finance. The
commission “may, if necessary, seek advice from financial experts.” The main responsibilityof the Financial Commission is to vet the budgets submitted by the Union ministries,
as well as the state and regional governments, and to submit these to the Pyidaungsu
Hluttaw and the president. Given that other parts of the constitution seem to allow thecommander in chief sole discretion over military spending—by far the largest componentof the budget—the extent to which the Financial Commission will have real control overeconomic policy making is questionable.

37
Food and Agriculture Organization of the United Nations, FAO/WFP Crop and Food Security Assessment Mission to
Myanmar (Rome: FAO, 2009)..

60

Appendix C: U.S. Sanctions on Burma
The economic and financial sanctions currently applied to Burma by the United States,
and their relevant dates of application, are as follows:
1997—President Bill Clinton issues Executive Order 13047, which prohibits all new
investment by U.S. persons or corporations beginning May 21, 1997. This order was enacted
under the auspices of the International Emergency Economic Powers Act—the provisionsof which underlay most U.S. sanctions programs—as well as Section 570 of the Foreign
Appropriations Act. These sanctions effectively amount to a comprehensive investment ban,but they contain an important “grandfather clause” with respect to investments agreed tobefore May 21, 1997.
2003—The Burmese Freedom and Democracy Act (BFDA) is signed into law by President
George W. Bush. The BFDA requires the U.S. president to ban all imports from Burma(with a waiver for products determined to be in the national interest), allows the impositionof a freeze on the assets of senior members of the Burmese government and other persons andentities (including certain banks) located in the United States, requires that the United Statesveto the provision of financial assistance to Burma by international financial institutions,and authorizes the president to withhold visas for entry into the United States of past andpresent leaders of the Burmese government, and other designated officials. Executive Order13310, issued by President Bush on July 28, 2003, to implement the BFDA, also included
a partial export ban of financial services provided to Burma by U.S. persons (anywhere),and by any other person or corporation located in the United States. In October 2007, thispartial export ban was effectively extended to include computer, micro processing, andother technological equipment to Burma. Meanwhile, an annex to Executive Order 13310
listed the persons, property, and interests subject to the asset freeze. This list has been
updated and expanded in scope in a series of subsequent executive orders (E.O. 13448 in2007, E.O. 13464 in 2008). On July 28, 2009, President Barack Obama signed the Burma
Sanctions Renewal Act, extending the BFDA for another year.
2008—The Tom Lantos Block Burmese JADE (Junta’s Anti-Democratic Efforts) Act becomeslaw. The JADE Act bans the importation of not just jadeite and rubies from Burma, butalso jewelry and other articles imported from elsewhere containing such stones. In order toenforce this, jade and rubies from elsewhere must be fully documented to prove that they are
not from Burma. The JADE Act also contains a number of other provisions. These include a
direction that the U.S. Department of State submit to Congress regular reports on countries
and entities that provide arms and intelligence to Burma, and that the president appoint a“Special Representative and Policy Coordinator” for Burma. One of the pre-1997 investment
ventures “grandfathered” under Executive Order 13047 is the Yadana gas project, in which
the U.S. oil firm Unocal (subsequently taken over by Chevron) holds a minority interest. The
JADE Act calls on Chevron, in a “sense of congress,” to “consider voluntary divestment over61

time.” Finally, the JADE Act includes the most comprehensive statement outlining the asset
freezing and dealing prohibitions against “blocked persons,” who include:
i. Former and present leaders of the SPDC, the Burmese military, or the USDA
ii.	Officials of the SPDC, the Burmese military, or the USDA involved in the repression of peaceful political activity or in other gross violations of human rights in
Burma or in the commission of other human rights abuses, including any current
or former officials of the security services and judicial institutions of the SPDC
iii.	A ny other Burmese persons who provide substantial economic and politicalsupport for the SPDC, the Burmese military, or the USDA
iv. The immediate family members of any person described in categories (i)–(iii)
In addition to these sanctions explicitly imposed on Burma, other measures containsome of the most significant injunctions against Burma’s government. These measures,
which arise primarily as a consequence of breaches by Burma’s government of international
norms relating to financial, narcotics, and criminal activities, include:• The designation in November 2003, under Section 311 of the USA PATRIOT Act,
that Burma’s financial system was a jurisdiction of “primary money laundering
concern.” The intention of the designation was:		...to deny Burmese financial institutions access to the U.S. financial systemthrough correspondent accounts. Thus, the proposed rule would prohibit U.S.
financial institutions from establishing or maintaining any correspondentaccount for, or on behalf of, a Burmese financial institution. This prohibition
would extend to any correspondent account maintained by a U.S. financial
institution for any foreign bank if the account is used by the foreign bank toprovide a Burmese financial institution indirect access to the U.S. financial
system. In such a case, the U.S. financial system would be required to ensurethat the account no longer is used to provide such access, including, if necessary,
terminating the correspondent relationship.38• The continual designation, over many years, by the State Department that Burma is
a “major illicit drug producing country.” This excludes Burma from certain forms of
U.S. assistance, while aviation and other links are also downgraded. In September
2008, the U.S. government identified Burma as one of three countries that had“failed demonstrably” to meet its international obligations to counternarcotics.39
38
These provisions relating to Burma under the USA PATRIOT Act are set out in U.S. Department of the Treasury,“Imposition of Special Measures Against Myanmar Mayflower Bank and Asia Wealth Bank as Financial Institutions ofPrimary Money Laundering Concern,” Federal Registry 68, no. 227 (November 25, 2003): 66305–66311.
39
See U.S. Department of State, “2009 International Narcotics Control Strategy Report, Country Reports,” February 27,
2009, http://www.state.gov/p/inl/rls/nrcrpt/2009/vol1/116520.htm (accessed February 2, 2010).

62

Map of Burma/Myanmar

China
BhutanKACHIN
STATE

India

Bangladesh

China

SAGAINGDIVISION

CHIN
STATE

VietnamSHAN
STATE
MANDALAY
DIVISIONARAKANSTATEMAGWEDIVISION

Laos

Naypyidaw
KARENNISTATEPEGU
DIVISION

Bay of Bengal

IRRAWADDYDIVISION

Rangoon

KAREN
STATE

RANGOON
DIVISION

ThailandMON
STATE

TENASSERIMDIVISION

CambodiaAndaman Sea

Gulf of Thailand

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Biographies of Task Force Members
Co-ChairWesley K. Clark is Chairman and CEO of Wesley K. Clark and Associates, a strategic
advisory and consulting firm. General Clark retired as a four-star general in 2000 after
serving 33 years in the U.S. Army. In 2004, he was a candidate for the U.S. presidency. From1997 to 2000, he was NATO Supreme Allied Commander and Commander in Chief ofthe U.S. European Command, where he commanded Operation Allied Force, NATO’s firstmajor combat action, which saved 1.5 million Albanians from ethnic cleansing in Kosovo.
General Clark is the recipient of numerous U.S. and foreign military awards, including theSilver Star, Bronze Star, and Purple Heart.

Co-ChairHenrietta H. Fore is Chairman and CEO of Holsman International, an investment andmanagement company involved in domestic and international business. From 2007 to
2009, Ms. Fore served as the first female Administrator of the U.S. Agency for International
Development (USAID). Additionally, she was designated as the Director of U.S. Foreign
Assistance, holding the equivalent rank as Deputy Secretary of State. She served as thethirty-seventh Director of the U.S. Mint in the Department of Treasury from August 2001
to August 2005. Ms. Fore is a Trustee of the Asia Society.

Members
Donald Emmerson is Director of the Southeast Asia Forum at Stanford University’s
Shorenstein Asia-Pacific Research Center. He is also a senior fellow at Stanford University’s
Freeman Spogli Institute for International Studies, and an affiliated scholar with the Centeron Democracy, Development, and the Rule of Law and the Abbasi Program in Islamic
Studies. A specialist on Southeast Asia and ASEAN, Dr. Emmerson serves on the editorial
boards of Contemporary Southeast Asia, the Journal of Democracy, and the Journal of Current
Southeast Asian Affairs.
George Packer has been a staff writer for The New Yorker since May 2003. In addition tohis coverage of Iraq, he has written on the atrocities committed in Sierra Leone, civil unrestin the Ivory Coast, and the Al-Jazeera satellite news channel. Mr. Packer was awarded
two Overseas Press Club awards for his work in 2003, one for his Iraq coverage and theother for his reporting on the civil war in Sierra Leone. In 2001–2002, he was awarded theprestigious Guggenheim Fellowship.

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Thomas Pickering is Vice Chairman of Hills and Company, an international consulting
firm that provides advice to U.S. businesses on investment, trade, and risk assessment issues
abroad. Ambassador Pickering retired from the U.S. Foreign Service in 2001 and holds the
personal rank of Career Ambassador. During his five-decade-long career as a U.S. diplomat,
he served as Undersecretary of State for Political Affairs, Ambassador to the United Nations,and Ambassador to Russia, India, Israel, Nigeria, Jordan, and El Salvador.
Paulo Sergio Pinheiro is a visiting professor of international relations at the Watson
Institute of International Studies at Brown University, and a research associate at the
University of Sao Paulo’s Center for the Study of Violence, which he founded in 1987.
From 2000 to 2008, he held the position of UN Special Rapporteur on the Situation of
Human Rights in Myanmar. He also served as UN Special Rapporteur for Burundi from1995 to 1999. Mr. Pinheiro is serving as a commissioner and as a rapporteur on children
for the Inter-American Commission on Human Rights with the Organization of America
States.
Kenneth Roth is the Executive Director of Human Rights Watch, a position he has held
since 1993. Mr. Roth has investigated human rights abuses around the globe, with special
expertise on issues of justice and accountability for atrocities committed in the quest forpeace; military conduct in war under the requirements of international humanitarian law;counterterrorism policy, including resort to torture and arbitrary detention; the humanrights policies of the United States, the European Union, and the United Nations; and thehuman rights responsibilities of multinational businesses.
James Scott is the Sterling Professor of Political Science and Professor of Anthropology
and the Director of the Agrarian Studies Program at Yale University. He is a fellow of theAmerican Academy of Arts and Sciences and has been awarded grants from the National
Science Foundation, the National Endowment for the Humanities, and the Guggenheim
Foundation. He has been a fellow at the Center for Advanced Study in the Behavioral
Science, Science, Technology and Society Program at the Massachusetts Institute ofTechnology, and the Institute for Advanced Study at Princeton University.
Amartya Sen is the Thomas W. Lamont University Professor and Professor of Economics
and Philosophy at Harvard University. He has served as President of the EconometricSociety, the Indian Economic Association, the American Economic Association, and theInternational Economic Association. Professor Sen’s many books have been translated into
more than 30 languages, and he has received numerous national and international awards,
including the Nobel Prize for Economics for his work in mathematical economics in 1998
and the Bharat Ratna in 1999, which is the highest civilian award given by the governmentof India.

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George Soros is the Founder and Chairman of the Open Society Institute and theSoros Foundations Network, which promote, among other things, the creation of open,
democratic societies based on the rule of law, market economies, transparent and accountable
governance, freedom of the press, and respect for human rights. Born in Budapest in 1930,
Mr. Soros survived the Nazi occupation and then fled Communist Hungary for England,
where he graduated from the London School of Economics. He then settled in the UnitedStates, where he accumulated a large fortune through the investment advisory firm hefounded and managed. Mr. Soros is the author of 10 books, including, most recently, The
Crash of 2008 and What It Means.
Richard Williamson served as U.S. Special Envoy to Sudan, Ambassador to the United
Nations for Special Political Affairs, and Ambassador to the UN Commission on Human
Rights. He served in senior foreign policy positions under Presidents Ronald Reagan andGeorge H. W. Bush, including Assistant Secretary of State for International Organizations
and Assistant to the President for Intergovernmental Affairs in the White House.
Ambassador Williamson was the Chairman of the Illinois Republican Party, and he iscurrently the Roberta Buffett Visiting Scholar at Northwestern University.
Suzanne DiMaggio (Project Director) is the Director of Policy Studies at the Asia Society,where she oversees the Society’s task forces, working groups, and Track II initiatives aimed
at promoting effective policy responses to the most critical challenges facing the UnitedStates and the countries of Asia. She directs the Society’s Iran Initiative, which brings
together knowledgeable and influential Iranians and Americans to discuss the contentious
issues that have come to define the U.S.–Iran relationship. She previously served as the Vice
President of Global Policy Programs at the United Nations Association of the USA.
Priscilla Clapp (Principal Advisor) is a retired Minister-Counselor in the U.S. Foreign
Service. During her 30-year career with the U.S. government, she served as Chief of Mission
at the U.S. Embassy in Burma (1999–2002), Deputy Chief of Mission at the U.S. Embassyin South Africa (1993–96), Principal Deputy Assistant Secretary of State for Refugee
Programs (1989–93), Political Counselor at the U.S. Embassy in Moscow (1986–88), andChief of Political-Military Affairs at the U.S. Embassy in Japan (1981–85).
Sean Turnell (Principal Advisor) is an Associate Professor of Economics at Macquarie
University in Sydney, Australia. A former Senior Analyst at the Reserve Bank of Australia,
Dr. Turnell joined Macquarie’s Economics Department in 1991. His research interests
include Burma and its economy, financial sector reform in developing countries, the historyof global monetary institutions, and the history of Australian economic thought. His bookexamining the history of Burma’s monetary and financial system, Fiery Dragons: Banks,
Moneylenders and Microfinance in Burma, was published in 2009 by the Nordic Instituteof Asian Studies Press.

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Recently Released Asia Society
Task Force Reports
A Roadmap for U.S.-China Cooperation
on Energy and Climate Change
Putting the World in World-Class Education –A National Policy Statement
Delivering on the Promise:
Advancing U.S. Relations with India
A Strategy for Stabilizing
Afghanistan-Pakistan
Asia’s Next Challenge:
Securing the Region’s Water Future
A Roadmap for U.S.-China Collaboration
on Carbon Capture and Sequestration
North Korea Inside Out:The Case for Economic Engagement

Preparing Asians and Americans for a Shared Future
Asia Society is the leading global and pan-Asian organization working to strengthen
relationships and promote understanding among the people, leaders and institutionsof Asia and the United States.
We seek to increase knowledge and enhance dialogue, encourage creative expression, and generate new ideas across the fields of policy, business, education, artsand culture. Founded in 1956, Asia Society is a nonpartisan, nonprofit educational
institution with offices in Hong Kong, Houston, Los Angeles, Manila, Melbourne,
Mumbai, New York, San Francisco, Seoul, Shanghai, and Washington D.C.
For more information, visit AsiaSociety.org/BurmaMyanmarReport