Building Democracy in Burma

PRISCILLA CLAPP

Former U.S. Chief of Mission in Burma, 1999-2002

July 24, 2007 www.usip.org Working Paper-02
UNITED STATES INSTITUTE OF PEACE

1200 17th Street NW, Suite 200

Washington, DC 20036-3011

© 2007 by the United States Institute of Peace.

The views expressed in this report do not necessarily reflect the views of the United

States Institute of Peace, which does not advocate specific policy positions. This is a

working draft. Comments, questions, and permission to cite should be directed to the

author at Priscilla.clapp@verizon.net.
About This Report

There is no easy answer to the question of whether and to what degree external actors

should intervene to trigger or force transition in extreme cases of autocratic or failed

governance. Often in the zeal to hasten the demise of bad regimes inadequate consideration is

given ahead of time to how the international community can best prepare a backward country

for effective democratic governance. Burma – a prime case of arrested development brought

about by decades of stubborn, isolationist military rule – provides ample illustration of this

dilemma. The great hope for instant transition to democracy that was raised by the 1990

parliamentary elections in Burma was dashed almost immediately by the failure of the military

regime to seat the elected parliament. Motivated by despair, many governments adopted

policies making regime change a sine qua non for engagement with Burma, hoping this would

force the military to follow through on its original promise to return to elected government.

Seventeen years later, however, the military remains firmly entrenched in power and the

country’s political, economic, and human resources have seriously deteriorated. Even if an

elected government could be seated tomorrow, it would find itself bereft of the institutions

necessary to deliver stable democratic rule.

Starting from the assumption that some degree of transition is inevitable in the not-toodistant future, this study explores the depth of Burma’s deprivations under military rule, focusing

on questions of how to make the country’s political, social, and economic institutions adequate

to the task of managing democratic governance. It identifies the international mechanisms

available to assist in this task, as well as innate strengths that can still be found in Burma, and it

discusses what the limitations on assistance might be under various scenarios for political

transition. Concluding that some degree of political transition will have to be underway before it

will be possible to deliver effective assistance, the study suggests that the most productive

policy approaches will require greater coordination and collaboration with Burma’s Asian

neighbors.

About This Series

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This is a working draft. Comments, questions, and permission to cite should be directed to the author.

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CONTENTS

Building Democracy in Burma....................................................................... 2

1. Introduction................................................................................................ 2

2. Historical Background ............................................................................... 6

3. Conditions in Burma Today ..................................................................... 14

3.1 The Nature of Military Governance.................................................... 14

3.2 Its Impact on the Economy ................................................................ 16

3.3 Governance and the Capacity of State Institutions............................ 22

3.4 Health and Education......................................................................... 23

3.5 Rule of Law........................................................................................ 26

3.6 The State of Civil Society and Non-Governmental Institutions........... 26

3.7 Religious Institutions.......................................................................... 29

4. Considering the Possibilities for Transition.............................................. 31

4.1 The SPDC model for gradual transition ............................................. 31

4.2 Transition triggered by regime infighting or internal coup .................. 33

4.3 Transition triggered by an unexpected, unforeseen event ................. 34

4.4 Transition triggered by widespread social unrest/economic distress . 34

4.5 Violent Overthrow .............................................................................. 35

5. Challenging Traditional Notions of Transition and Democratization ........ 36

6. Burma’s Most Urgent Needs and Potential Areas of Strength................. 38

6.1 Economic........................................................................................... 38

6.2 Political .............................................................................................. 43

6.3 Health and Education......................................................................... 45

6.4 Security.............................................................................................. 48

7. Sources of International Assistance ........................................................ 49

7.1 International Financial Institutions...................................................... 51

7.2 UN Agencies...................................................................................... 52

7.3 International NGOs ............................................................................ 53

7.4 Donor Governments .......................................................................... 54

7.5 Exile Resources................................................................................. 55

8. Adjusting International Assistance and Policy to Different Scenarios...... 56

9. Conclusions and Policy Implications ....................................................... 59

9.1 China and India.................................................................................. 60

9.2 ASEAN............................................................................................... 62

9.3 The United Nations ............................................................................ 63

9.4 The United States.............................................................................. 63

Appendix 1. Principles For Good International Engagement in Fragile

States............................................................................................................. 67

ABOUT THE AUTHOR ...................................................................................... 72

ABOUT THE UNITED STATES INSTITUTE OF PEACE .................................. 72
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UNITED STATES INSTITUTE OF PEACE – WORKING PAPER

Building Democracy in Burma

This is a working draft. Comments, questions, and permission to cite should be directed to the author.

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Building Democracy in Burma

PRISCILLA CLAPP

Former U.S. Chief of Mission in Burma, 1999-2002

1. Introduction

Noted observers of trends in democratic transition reckon that the last quarter of

the twentieth century may prove to be “the greatest period of democratic ferment in the

history of modern civilization.”

1 The disintegration of the Soviet Union and dissipation of

the East-West divide gave dramatic impetus to this trend, providing us with a wide

perspective on the process of political transition and the many pitfalls faced when

striving to replace entrenched autocracies with pluralistic liberal democracy. Eastern

European states under the sway of Soviet communism represent an example of

relatively stable and orderly transition in which political and economic development were

supported by a wealth of underlying institutions and encouraged by the prospect of

joining the European Union. On the other hand, former Soviet republics that became

independent states have, with the exception of the Baltics, experienced more difficulty

shedding the Soviet heritage of authoritarian government, centralized economic controls,

the culture of corruption, and unfamiliarity with individual rights and responsibilities

inherent in democracy to develop effective political and economic institutions. While

they have all experienced political transition, it has not necessarily brought these new

countries closer to liberal democratic governance.

The same period has seen generally positive trends in Asia, where a number of

countries formerly dominated by military regimes have undergone successful political

evolution toward democracy, buoyed by strong economic growth and the development of

free market economies. Economic globalization and the end of the cold war have also

given rise to political and economic liberalization in China and Vietnam, despite the

persistence of communist political structures. Both countries are now engaged in fullscale economic, social, and political reform that appears to be paving the way for

 1 Larry Diamond and Marc Plattner, The Global Resurgence of Democracy (Second Edition), Johns Hopkins

University Press, Baltimore, 1996, p. ix.
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eventual pluralistic governance of some sort. By contrast, political transition in Africa

during this period has been generally characterized by inability to build stable political

and economic institutions to bridge and offset tribal rivalries and competition over

resources. Although there are notable exceptions, more often than not, African

countries have struggled with the process of nation building, including the creation of

central state structures strong enough to serve disparate constituencies adequately.

Even Latin America, which appeared by the early 1990’s to be a continent in

transition to vibrant, stable democracy, by the turn of the century was experiencing

dangerous trends in economic stagnation and, in some cases, authoritarian perversion

of democratic rule. Although the hemisphere’s military governments had largely been

replaced by civilian democratic structures and economic growth had been robust in the

mid-90’s, other internal and external forces were working against the smooth

development of economic, social, and political institutions that would help the emerging

democracies deliver the expected fruits of democracy to their people. In some

countries, state institutions were not adequate to cope with criminal drug cartels and

militias, as well as rampant corruption. In many places political institutions, legislatures,

and judicial systems were still too weak to deliver reliable governance, although great

strides had been made in some of the larger, more established democracies.

Encouraging political transition that provides space and peaceful evolution for all

elements of a society is an extremely complex proposition. No two cases are the same

and no single element of democratic behavior, such as the formation of political parties,

elections, religious freedom, free markets, freedom of the individual, racial and gender

equality, can provide the magic solution. Social, economic, and political development

must be comprehensive to lay the foundation for stable pluralistic government. In some

countries, such as Poland, Hungary, the Czech Republic, and South Africa, a sense of

national identity and purpose has been strong enough to overcome tribal and ethnic

differences. Moreover, solid economic structures and considerable previous experience

with civil and political plurality have allowed their societies to navigate relatively smooth,

but nonetheless revolutionary, transitions. In countries where diverse societies have

been held together by autocratic rule, which purposely exacerbates internal animosities

and impedes the development of complex civil society, transition has often been plagued

by internal conflict and tension, making democratic outcomes all the more difficult. In 
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fact, not only does the lack of political and civil institutions and a reliable economic

structure, let alone civil tolerance among diverse ethnic and religious groups, impede

and prolong transition to pluralistic governance, it often sets the scene for anarchy and

reversion to autocratic rule.

When it comes to the question of whether and to what degree outside actors

should intervene to trigger or force transition in extreme cases, where autocratic or failed

governance is brutalizing people, there is no easy answer. If the horrors of ethnic

cleansing in the former Yugoslavia or Rwanda taught us what may happen when the

world lets nature take its course, then the American intervention in Iraq to topple the

Saddam government can be seen as a lesson in the dangers of acting decisively to force

regime change. In both cases, the international community has, to some extent,

inherited the responsibility for dealing with the chaotic consequences, struggling with the

extreme difficulty of fostering democratic institutions and effective free market

economies in societies that have not yet learned how to negotiate among themselves.

Yet the profound frustration in advanced democratic societies with the senseless and

seemingly needless brutality of extreme dictatorships, particularly those who threaten

their neighbors, often creates public pressure on these governments, as well as on

international institutions, to force change, regardless of the consequences. In most

cases, it is simply assumed that any outcome would be better than the present state.

Unfortunately, in the zeal to hasten the demise of bad regimes, inadequate thought is

given ahead of time to how the international community can best deal with the aftermath

of “regime change.” 

These are the dilemmas that confront us in contemplating how to deal with one of

East Asia’s two remaining anomalies to the generally positive political trends underway

in the rest of the region -- the truculent, intractable military dictatorship in Burma.2 U.S.

policy toward Burma has, since 1990, been premised on the requirement to seat an

elected parliament before serious international economic, humanitarian, and other forms

 2 The other Asian anomaly, North Korea, presents a somewhat different set of issues, because

considerable thought and planning, especially in South Korea, has been devoted to dealing with the likely

consequences of regime change in this case.
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of material assistance can be undertaken. This premise has, in turn, had the effect of

confining policy discussion in the U.S. to the question of how to unseat the stubborn

military regime. Discussion of policy toward Burma seems generally to assume that,

because the country succeeded in electing the main opposition party overwhelmingly in

1990, the removal of military rule would ipso facto allow democracy to flourish. In fact,

however, many of the same expectations held by senior officials in the Bush

Administration that regime change would allow democracy to spring forth and flourish in

Iraq may be just as misguided in the case of Burma, because decades of politically

repressive and economically regressive military rule have left the population without the

tools to navigate the troubled waters toward stable, pluralistic, democratic governance.

This study will focus not on questions of how to bring about political transition in

Burma, but rather on how to make the country’s political, social, and economic

institutions adequate to the task of managing democratic governance, once transition is

underway. It will begin with the premise that some degree of change is inevitable in

Burma within a not-too-distant timeframe and that, therefore, the international community

should be concerned now with identifying the most appropriate forms of assistance and

intervention to help Burma develop the means for sustaining stable democracy, a dream

that eluded the country fifty years ago. The study also proposes – as will be explained in

subsequent sections -- that effective international assistance to address economic,

health, humanitarian, and governance deficiencies is simply not possible under the

current government and that political transition, or at least the beginnings of political

transition, will be necessary for serious work to begin on building and rebuilding Burma’s

social, economic, legal, and governmental institutions. Although this task will require

substantial and wide-ranging international assistance, there are also many positive

elements inside Burma today that can be encouraged to develop rapidly once transition

is underway. In addition to surveying potential international resources for assistance,

the study will attempt to identify the most important of Burma’s inherent strengths, some

of which might be bolstered by international assistance even before serious transition is

underway.

In brief, this study is not concerned so much with current bilateral or international

policy options or political initiatives aimed at forcing change in Burma. Rather, it

anticipates a point in the future when transition - in one form of another - will be
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

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underway and when serious, effective international assistance and investment may be

possible. We will begin with a brief review of post-colonial political developments in

Burma and then explore in more detail the degree to which political, economic, and

social development in Burma has been arrested and distorted by decades of harsh

authoritarian rule. We will then postulate a series of possible scenarios for transition in

order to evaluate how the form that transition takes may affect the possibilities for

assisting the development of the institutions and conditions necessary for stable

democracy.

2. Historical Background

A textbook case of arrested development, Burma falls more in the pattern of

post-colonial Africa than it does Asia. From nearly a century of British colonial rule it

inherited the structures and institutions of free market parliamentary democracy, but like

many countries in Africa, was not able to translate these into an enduring foundation for

sustainable democratic governance. The quasi self-rule that obtained in the latter

colonial years produced a functioning parliamentary system after independence, but did

not succeed in developing a sense of national identity and common interest for Burma’s

multi-ethnic society as a whole. Furthermore, preferences within the ethnic Burman

ruling elite for socialist, centrally controlled economic structures derailed the

development of a vibrant market economy. The underlying political ferment and

discontent within the non-Burman ethnic groups and the deep political divisions among

those elected to government created fertile ground for the country’s strongest institution

– the military – to grasp the reins of power in the name of bringing order to the country’s

chaos.

Independent democratic governance in Burma lasted less than 14 years. Since

1962, the country has been ruled continuously by army generals, who have steadily and

inexorably brought almost all of its political, social, and economic life under strict military

control. Even as other military governments in Asia were giving way to civilian

governance and budding democracy in the latter decades of the 20th century, Burma’s

military leaders were tightening their harsh controls and systematically draining the

strength from civilian institutions, effectively sapping Burmese civilian society of its ability

to take collective responsibility. At the end of the long reign of General Ne Win in 1988,
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a popular uprising against military rule, inspired by student activists, was brutally

suppressed by the army. In the aftermath, a triumvirate of generals emerged at the

head of a new military regime. Apparently attempting to return the country to a form of

military-controlled parliamentary government (as had prevailed under Ne Win), the

generals held an election in 1990, in which their chosen party failed to win the majority

vote and was, on the contrary, overwhelmed by the large vote for the opposition.

Stunned by the outcome, the generals refused to seat the elected parliament, insisting

that a new constitution would have to be drawn up first under terms dictated by them.

The party that won the election in 1990, the National League for Democracy (NLD), and

its charismatic leader Daw Aung San Suu Kyi were effectively excluded from the

constitutional process and subjected to harsh repressive measures, including jail. More

than 15 years later the new constitution has yet to emerge and the forces of political

opposition are repeatedly constrained and harassed by the regime.

Interestingly, for a few years during this period, until mid-2004, there were some

tentative openings to the international community from the military regime, spurred

largely by one of the three ruling generals – General Khin Nyunt - who, unlike the other

two, seemed to recognize that progress and prosperity would elude Burma without wider

exposure to the outside world. He understood that, in order to facilitate the regime’s

trade and investment goals, certain concessions would have to be made to assuage

international concern about the lack of political transition. As a consequence, a portion

of the economy was opened to free market commerce and foreign investment was

solicited. One of the most enduring results of the new foreign investment was

development of an infrastructure for tourism, opening Burma to a wider range of foreign

visitors than previously during the period of military rule. At the same time, UN

assistance agencies and international NGOs were allowed to establish programs in

various areas of the country to address health, education, agriculture, income

generation, refugees, and a variety of humanitarian problems. The ICRC (International

Committee for the Red Cross) was given access to the large prison population, most

importantly the political prisoners who had been languishing in detention for a decade or

more. The ILO (International Labor Organization) was able to post a representative in

Rangoon to address the problem of forced labor. Burma became a member of ASEAN

(Association of Southeast Asian Nations) and began participating in regional activities.

Under the guidance of General Khin Nyunt, Burma’s foreign policy became more
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interactive, particularly in the Asian region. Finally, in the 2000-2003 timeframe, the

military leadership agreed to talk directly with Aung San Suu Kyi and the NLD about

conditions for establishing a multi-party political system. As a consequence of the talks,

in 2002, Aung San Suu Kyi was allowed freedom of movement within the country for the

first time since 1989. Unfortunately, when it became obvious to the generals that Aung

San Suu Kyi’s popularity had only grown during her long years of detention and isolation,

she was arrested once again and, after a few months in prison, has been held under

house arrest since September 2003.

Aung San Suu Kyi’s arrest also signaled the beginning of the end of General

Khin Nyunt’s membership in the ruling triumvirate. He continued during the ensuing year

to pursue an active foreign policy agenda, attempting to mitigate the international fall-out

from the attack on the NLD, and to reestablish the groundwork at home for including the

NLD in a managed political transition. (In fact, one close observer believes that Khin

Nyunt’s team’s discussions with Aung San Suu Kyi and the NLD leadership during 2003-

2004 concerning the terms of their participation in the National Convention were even

more serious and potentially productive than the “confidence building” period of 2000-

2002.)

3 However, Khin Nyunt was apparently becoming a thorn in the side of the highly

autocratic top general, Senior General Than Shwe, perhaps because he appeared to be

aggrandizing his own position within the ruling triumvirate by taking the lead in political

transition. On the eve of the reconvening of the National Convention in May 2004, the

SPDC rejected the understandings General Khin Nyunt’s team had reached with the

NLD for its participation. General Khin Nyunt was unceremoniously arrested in October

2004 and subsequently sentenced to 44 years in jail (which he was then allowed to

serve under strict house arrest). The military and civilian structures under his authority

were dismantled and more than 30,000 military forces were discharged, demoted, or

sentenced to long jail terms. Several ministers were fired and threatened with

punishment. Many members of the business community, who had profited from Khin

Nyunt’s patronage were disenfranchised. The remaining two military factions,

 3 Interview with an international mediator who worked with both the SPDC government and Daw Aung San

Suu Kyi.
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associated with Generals Than Shwe and Maung Aye respectively, competed with each

other to grab the spoils of Khin Nyunt’s purge.

In a matter of months, the various openings to the international community

inspired by Khin Nyunt began to close. Burma’s diplomacy within the region and with

the United Nations withered. The UN Secretary General’s Special Envoy for Burma,

who had helped broker the earlier talks between the government and Aung San Suu Kyi,

was denied access to Burma and finally quit in frustration. The UN Human Rights

rapporteur was also blocked from visiting the country. New constraints were levied on

the activities of UN agencies and international NGOs in Burma. The ICRC was denied

access to prisoners without the accompaniment of government agents, and the ILO

representative was subjected to death threats. Burma’s relations with ASEAN began to

deteriorate, largely because of ASEAN’s reaction to the negative turn of events, but also

due to inept diplomacy on Burma’s part. Under pressure from ASEAN, Rangoon agreed

to postpone its presidency of the organization in 2006, until such time as it had made

progress with political transition.

In late 2005, things took a bizarre turn when the regime suddenly ordered all

government ministries to decamp abruptly from Rangoon to a new, previously

undeveloped administrative center in a relatively remote area called Pyinmana, halfway

between Rangoon and Mandalay. Thousands of civil servants and military troops,

along with their office furniture, were transported in trucks to Pyinmana, where they were

left for months to subsist largely without housing, food, electricity, or running water.

Vacated government buildings in Rangoon were leased out to Burmese and Chinese

companies in return for their services in helping to build the new capital. Former

inhabitants of the Pyinmana area, especially in the Karen villages, were brutally

displaced from their homes by the army and scattered to other parts of the country.

Foreign embassies were given two years to relocate to Pyinmana, as well. 4

 4 The generals undoubtedly took their cue for this move from historical patterns during Burma’s days of

empire. In his history of Burma, The River of Lost Footsteps ( 2006), former UN Secretary General U

Thant’s grandson Thant Myint-U describes how ancient Burmese kings would suddenly move lock, stock,

and barrel to a new capital, carrying even the walls and beams from their palaces to reconstruct them in the

new capital. The old capital would be largely depopulated and shorn of its royal trappings.
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Not surprisingly, the mass transfer to Pyinmana, subsequently renamed

Naypyitaw (loosely translated as Royal City or Seat of the Kingdom), did not go entirely

smoothly. With inadequate utilities, transportation, and communications infrastructure

during its first year, the new capital functioned more as a military stronghold than an

effective administrative center. By the end of its first year, the intense construction effort

devoted to Naypyitaw had produced dramatic results in the form of grand new

government ministry buildings, wide avenues, massive apartment blocks for government

employees, palatial residences for the top generals, extensive military fortifications and

ceremonial facilities, and hotels for visiting foreign guests. Most of the amenities of

urban life, however, have yet to emerge and government officials forced to move to

Naypyitaw find it difficult to convince families to accompany them and are said to seek

every possible opportunity to return to Rangoon. Doing business with the government

now requires a much greater investment of time and resources on the part of both

Burmese citizens and foreign entities.

In typically Burmese fashion, there has been no satisfactory explanation for the

sudden move to Naypyitaw. Although government spokesmen have suggested that it

was a strategic necessity to place the seat of government in the center of the country,

where it could relate more closely to the various ethnic minorities and ensure stability,

few have accepted this as the real reason. Many believe it was inspired more by the

irrational fears and ambitions of Senior General Than Shwe, who is believed by some

Burmese observers to be increasingly detached from reality as he ages. Than Shwe

has made no secret that he equates himself with the ancient Burmese warrior kings and

feels a responsibility to restore the glories of Burma’s royal traditions that were abolished

by British colonialists. Among other things, it was customary for Burmese kings to

consolidate their regimes by building elaborate new capitals to leave their own unique

imprint on history. Similarly, there is no doubt among Burmese that the move to

Naypyitaw, especially its surprise timing, was conditioned heavily by the leadership’s

interpretation of advice from the ever-present astrologers and soothsayers. The

emerging outlines of the new capital suggest strongly that the move was inspired

fundamentally by a perceived need within the military leadership to remove the final

vestiges of colonialism represented by the capital of Rangoon, to return to a bygone era

when kings ruled the realm from grand strongholds in the center of the country, to fortify
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11

the government against unwanted foreign influence, and to consolidate a firm ethnic

Burman cultural and political dominance in preparation perhaps for the return of some

form of parliamentary government.

Whatever its motivation, the capricious move has been a very expensive decision

for the government, because in addition to building infrastructure, it has had to offer

incentives to military and government officials to buy their acquiescence. In April, 2006,

for example, the salaries of all military and civil service employees were increased by a

multiplier of between five and twelve, depending on rank and position. In addition to

grand residences in Naypyitaw, senior officials have been given new houses in Rangoon

for their families to offset the inability or unwillingness of families to accompany

government employees to the new city. Many commodities and resources have been

diverted from Rangoon to Naypyitaw, creating significant market disruptions and a new

wave of inflation in Rangoon, which is home to more than ten percent of the country’s

population. As might be expected, the sudden salary increase for government

employees propelled the inflationary wave to new heights. As with previous government

salary increases, the government simply printed more money to finance it.

By the end of 2005, it became evident that the regime was placing increasing

emphasis on its diplomacy with India, Russia, and its long-standing protector China.

This is undoubtedly explained by two major concerns: first, the need to generate reliable

sources of large-scale external capital to support its strategic goal of building

unassailable military domination of every corner of the country; and second, the need for

powerful patrons in the international community to offset and prevent any moves in the

United Nations or elsewhere to internationalize sanctions on the military government in

an attempt to force political transition. Indeed, when the United States and others tried

to pass a Security Council resolution on Burma in early 2007, it was vetoed by China

and Russia.

Nevertheless, despite outward appearances that its power is unassailable, there

are also strong indications that the regime is under increasing pressure both internally

and externally. Internally, the purge of General Khin Nyunt and his supporters has

exposed strong fault lines within the military leadership that were previously blurred by

the trilateral balance of power. The competition between the faction of the senior ranks
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12

aligned with Senior General Than Shwe and that aligned with his deputy General Maung

Aye is barely disguised. The placement of general officers in various key military

positions is like a game of chess, with Than Shwe and Maung Aye constantly trying to

outmaneuver the other, playing by intricate rules of military protocol and tradition. These

games add an element of uncertainty to decisions on advancement, placement, and

retirement within the upper ranks of the military, leaving everyone off balance. With the

two top generals advancing in age and declining in health, they are both trying to outlast

each other in order to determine which faction will inherit the mantle of leadership.

Considering their age and poor health, the prospect of a generational transition in the

military leadership cannot be very far in the future, thus increasing the stakes of the

current state of play in the internal competition.

Chief among the external factors weighing on the military leadership is the

abysmal state of the economy. Burma’s reliance on imported fuel, its energy shortages,

trade deficits, the huge cost of maintaining its unprofitable state-owned enterprises, and

many other deficiencies resulting from decades of inept military management leave the

economy in a constant state of instability and uncertainty. The bulk of the economy is

informal, rife with black market activity and subject to temporary disruptions in the supply

of critical commodities, such as rice, cooking oil, gasoline, and electricity. Petty thievery,

pilferage, and even murder are becoming more visible, as those at the bottom of the

food chain struggle to make ends meet. While the majority of the population ekes out a

subsistence existence off the land, the urban population suffers both materially and

psychologically from its vulnerability to the regime’s haphazard economic management.

5

Although the SPDC appears to be reaping windfall hard currency profits from

natural gas deposits, as energy prices rise, we should be careful not to overestimate the

significance of this gain. First, the current gas revenues derive mainly from sales to

Thailand that have been underway for several years. The significant revenues expected

from the underwater deposits off Sittwe will not develop until after 2009. Second, the

regime appears to be spending these profits on showpiece projects, such as the new

 5 Because Burma’s rural economy tends to be largely non-monetary, it is not affected as seriously by

inflation as the urban economy. Urban inflation has been spiraling uncontrollably in recent years. Australian

economist Sean Turnell (see below) cites IMF estimates that is it now running at about 50 percent annually.
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13

capital Naypyitaw, its sister city near Maymyo (Pyin Oo Lwin), and a frivolous nuclear

research facility, which do not contribute materially to economic growth and the

betterment of the country’s population. And finally, there are as yet no visible plans to

direct enough of this gas into Burma in order to ease the country’s reliance on imported

fuel. As the ADB (Asian Development Bank) noted in early 2007, Continuing

macroeconomic fragility will keep the economy vulnerable to sharp downturns in gas

prices, as will shocks such as political strife, poor harvests, or instability in the banking

system.

6 In other words, the gas revenues do not improve economic stability so long as

the SPDC refuses to address macroeconomic reform.

Externally driven pressures are also being mounted by the rapid development of

new communications technology, such as the internet, satellite telephones, and satellite

TV and radio. It is now increasingly difficult for the regime to insulate its urban

population from the outside world. The dismantling of the old university structures has

not dimmed the thirst for education and knowledge. Many private institutions for

advanced education have sprung up and the younger generation is eagerly reaching for

modern skills. While the older generation may have become resigned to life under harsh

military rule, there is no guarantee that the younger generation, coming into its own

today, has the same attitude.

In essence, the ruling military regime is out of touch with reality, internally

unstable, and increasingly challenged by competing interests, both domestic and

foreign, which it is much less equipped to anticipate and evaluate without the capability

of its former intelligence services. Some form of leadership change at the highest level

will probably take place in the foreseeable future, if only because both top leaders are

elderly and unwell, but this change is only likely to bring another committee of generals

to power, at least for a while. The possibilities for real transition appear to be farther out

on the horizon. While transition would be greatly facilitated by a decision on the part of

the military to proceed with a negotiated transition, including serious reforms, sadly it is

more likely to emerge eventually from some combination of internal events, triggered by

a convergence between inept leadership decisions and popular frustration.

 6 Asian Development Bank, Asian Development Outlook 2007, March 2007, p. 221.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

14

3. Conditions in Burma Today

3.1 The Nature of Military Governance

In many ways, Burma’s military regime, the self-appointed SPDC (State Peace

and Development Committee), embodies the sum total of the country’s past. Its

character has been shaped by every period in Burmese history.

7 The top general Than

Shwe considers himself to be the modern embodiment of Burma’s ancient warrior kings

and, to a certain extent, he models his deeply authoritarian rule on royal tradition. Like

the ancient royalty, the power of the SPDC relies not on popular support, but on popular

fear and servitude, using the Buddhist sangha (organization of monks) to legitimize itself

with the people. The tatmadaw, today’s Burmese armed forces, traces its roots to the

anti-colonialist nationalistic Burmese army, formed originally by General Aung San, and

it still harbors all the fervor it once had against foreign control, meddling, and influence

inside the country. The military leaders are discomfited by the structures of government

inherited from the colonial masters and have indoctrinated their ranks in the belief that

Burmese are not culturally suited to Western style democracy and need to be ruled with

a firm hand in order to avoid national disintegration. The decision to move the seat of

government from Rangoon to Naypyitaw is an apt illustration of these historical

characteristics in the military leadership: first, it represents a return to the practice of the

ancient kings who would build lavish new capitals to consolidate their respective reigns;

second, it can be seen as an effort to expunge the final vestiges of the colonial period by

abandoning the capital established by the British, which is still dominated by the old

colonial buildings; and third, the regime perceived it as a strategic move to the center of

the country from where the military would be well placed to control potential

insurgencies. Ironically, Pyinmana was a stronghold of Burma’s Communist Party when

it was mounting an armed challenge to the young democracy in the late 1940’s and early

1950’s.

8

 7 Thant Myint-U’s River of Lost Footsteps, op. cit., provides an excellent description of all the historical

factors over the centuries that have molded the mentality of today’s tatmadaw.

8 Ibid. p. 260.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

15

The SLORC/SPDC itself is more or less the natural outgrowth of Ne Win’s

socialist dictatorship, maintaining and even tightening military control over the country

and clinging to the centralized command economy. Undoubtedly viewing the events of

1988 as the result of deficiencies in Ne Win’s administration, they made a series of

adjustments over the years to avoid a repeat of these events. There were, for example,

adjustments in economic management to allow a small sector of free market activity and

attract foreign investment, to bring more commodities and natural resources under the

direct control of the military (at least in part to improve the military’s revenue stream),

and to regulate more carefully the supply of essential commodities in urban areas to

avoid disruptions that might trigger riots. There were also adjustments to the

educational system to reduce the potential for student movements and protests by

scattering the universities and abolishing dormitories. Ne Win’s personal rule was

replaced by a committee structure dominated eventually by three senior figures,

Generals Than Shwe, Maung Aye, and Khin Nyunt. With the removal of General Khin

Nyunt from the triumvirate in 2004, however, the SPDC seems to have reverted to the

pattern of personal whimsy that characterized Ne Win’s regime, with General Than

Shwe now providing the dominant personality.

The twelve members of the SPDC today are all military officers holding the most

senior responsibilities in the army hierarchy. Cabinet ministers are also, with only two

exceptions, military officers with little or no background in governance. The SPDC

does not meet on its own as a body, but joins the once monthly cabinet meetings and

the thrice yearly meetings of all senior cabinet and military officials at which broad policy

and strategic issues, including military activity, are decided. The Vice Senior General

Maung Aye chairs the Trade Policy Committee, which meets once a week and rules on

all decisions, both general and detailed, affecting external and internal economic

regulation. Senior General Than Shwe chairs the Special Project Implementation

Committee and the Special Border Projects Committee, which approve all decisions on

major economic undertakings, such as resource concessions (mining, forestry, etc.),

infrastructure construction (bridges, dams, irrigation, etc.) energy projects, and

agricultural policy. Than Shwe’s committees are more consequential than Maung Aye’s

committee, although together they make all major economic decisions and are

responsible for the irrational and seemingly haphazard quality of the government’s
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

16

approach to economic policy. The generals, especially Than Shwe, do not ask for

advice, and those beneath them do not dare to give it. Facts are routinely constructed to

meet perceptions of what the generals want to do or believe about the economy.

Unpleasant facts are scrupulously avoided. Those at the top framing the issues and

making the decisions have little to no expertise in economic management and lack longterm vision. Their main concern is simply to make it through another day without any

serious challenge to their absolute rule. In the end, however, the inner workings of the

Burmese military hierarchy are largely inscrutable, even to those inside the regime. The

internal dynamics of the armed forces are deliberately hidden and the essential

decisions are made at the top with little involvement of people at lower levels.

Ultimately, the absolute power of the SPDC may be more a matter of appearance

than of reality. In a recent monograph, noted authority on Burma, Mary Callahan argues

that the SPDC apparatus exercises little coherent and absolute control over day-to-day

governance in Burma, because it is unable and unwilling to impose its authority

consistently on government agencies that tend to operate against each other, often at

cross purposes with stated government policy and local forces tend to govern life in

outlying ethnic areas. Furthermore, government officials, military authorities, and

various economic actors routinely participate in the informal and illegal economy,

according to their own rules, in order to support themselves. She concludes that, The

scale of corruption by government officials -- unprecedented in postcolonial history –

may indeed represent the most significant limit on state omnipotence. Thus the degree

to which the SPDC actually rules the lives of the country’s citizens varies widely from

one region to another, with the outlying ethnic areas being largely the domain of

alternative powers.

9

3.2 Its Impact on the Economy

Aside from humanitarian considerations, the most serious result of four decades

of autocratic, inward looking military rule in Burma is the creation of massive

 9 Mary P. Callahan, Political Authority in Burma’s Ethnic Minority States: Devolution, Occupation, and

Coexistence, Policy Studies 31 (Southeast Asia), East-West Center, Washington, D.C. 2007, p. 11.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

17

macroeconomic distortions.

10 As one of the preeminent external observers of the

Burmese economy, Sean Turnell, has described it: Burma has a deeply unstable

macroeconomic environment. The country lacks the fundamental institutions of a market

economy, policy-making is arbitrary and uninformed, inflation is rampant, the currency is

distrusted and trades via a multiple of exchange rates, unemployment is endemic,

taxation is chaotic and the Government finances its spending by printing money. To this

list can then be added all-pervasive corruption, a growing trade deficit, foreign debt

arrears, the imposition of economic sanctions and negligible foreign investment (Turnell

2006). Burma, in short, is in possession of almost every conceivable macroeconomic

malady.

11

These distortions are so serious today that they constrain the capacity of the

national economy for sustained development and make it very difficult for foreign

investment or foreign economic assistance to contribute to sustainable economic

development. Most land is held by the government and cannot be used to leverage

capital, the banking system does not function in support of economic growth, but acts

rather as a siphon for hard currency to offset massive government deficits. Local

currency devalues so rapidly that entrepreneurs have no incentive to monetize their

profits. Foreign economic assistance is directed mostly at infrastucture projects

designated by the military, which may or may not have an economic development

rationale.

How the military government approaches decisions on the development of the

country’s sizeable offshore gas reserves is a case in point. When Total and Unocal

developed the Yadana gas deposit, they proposed not only to build a pipeline eastward

to provide gas to Thailand for hard currency profits, but also to run a separate pipeline in

 10 The discussion of macroeconomics in this section draws heavily on the work of Stefan Collignon, in

particular his chapter in Robert Taylor, editor, Burma: Political Economy under Military Rule, Hurst &

Company, London, 2001. See also Stefan Collignon, “Why Do Poor Countries Choose Low Human Rights?:

Lessons from Burma,” Revised Inaugural Lecture at the Faculty of Economics, Freie Universitet Berlin,

November 17, 1999.

11 Sean Turnell, “A Survey of Microfinance in Burma,” in Burma Economic Watch, No. 1, 2005, online

resource of Macquarie University, Australia.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

18

the direction of Rangoon to supply Burma with the energy it needed to develop industry

and generate electricity for the large urban center. The cost of the second pipeline

would have been financed easily by the profits from the pipeline to Thailand. The top

general, however, ruled against the second pipeline, reportedly because he believed the

price tag was too high and he could only conceive of the project as a net economic loss.

At the present time, India, China, Singapore, and South Korea are competing to pay the

SPDC many billions of dollars to extract natural gas for export from another large offshore deposit. Right now the SPDC appears to have no plans to divert any of this fuel

into Burma itself for power generation and economic development. It seems interested

primarily in harvesting the hard currency returns for its own discretionary use. Thus,

despite windfall profits from energy exports, the country’s economic development will

continue to be severely constrained by lack of access to energy and investment capital.

Another telling example of this syndrome can be found in the recent study of

UNDP’s experience with micro-finance projects in Burma by Australian economist Sean

Turnell, which found that the greatest stumbling block to making micro-finance

sustainable was the plethora of underlying macroeconomic distortions, most especially

the monetary system. Even after years of negotiation with government agencies, UNDP

has not succeeded in fostering the legal instruments necessary to allow micro-finance

schemes to sustain themselves independently or to connect with the legal banking

system, primarily because the Ministry of Cooperatives has been unwilling or

unauthorized to draft laws legalizing microfinance practices. 12

Successive military regimes in Burma have managed to keep the economy at a

bare subsistence level because the military leadership controls most of the country’s

means of production through one device or another and holds the key monetary

mechanisms in its own hands.

13 Although there are a number of private enterprises,

they operate at the pleasure of the military authorities and must pay princely bonuses to

individual military officers in order to survive. If they do not, they are quickly taken over

 12 Ibid.

13 David Steinberg provides a detailed account of the history and extent of military control of Burma’s

economy in “Burma/Myanmar: The Role of the Military in the Economy,” Burma Economic Watch, 1/2005,

www.econ.mq.edu.au/BurmaEconomicWatch.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

19

by the military authorities. Although there is a handful of private banks, none of them is

allowed to handle hard currency; this function is reserved exclusively for the two

government-controlled banks, the Myanmar Foreign Trade Bank (MFTB) and the

Myanmar Investment and Commercial Bank (MICB), whose coffers of hard currency are

regularly diverted to military priorities. There are at least four widely different exchange

rates for kyat, the local currency, against the dollar: the official rate of roughly 6 kyat to

the dollar;14 the customs valuation rate of 850 kyats to the dollar; the official exchange

rate of one dollar-denominated Foreign Exchange Currency (FEC) to the dollar, and the

unofficial black market rate, which is currently hovering between 1250 and 1350 kyat to 

the dollar. The FEC also trades on the black market at a slightly lower exchange rate

than the dollar. The government itself often sanctions crony trading firms to buy dollars

on the black market in order to purchase commodity or other essential imports. This, of

course, can create a spike in kyat devaluation against the dollar, which the government

then attempts to control by arresting the money traders.

Military leaders control trade policy, taxing both imports and exports and often

banning the export of certain food commodities in order to manipulate the domestic

market. Shortages and distortions in the supply of basic commodities, such as rice,

cooking oil, gasoline, and electricity, are common occurrences that can most often be

explained by shortsighted, politically motivated decisions by the top military leadership.

While the regime maintains elaborate controls over the production, distribution, import,

and export of these commodities, fears about the political consequences of commodity

shortages regularly cause sudden policy changes in one area without any regard for how

this may affect activity in another area of the economy. This policy capriciousness is

compounded by the constant demand the military system itself puts on the supply of

food, gasoline, and electricity.

The way the military government manages the country’s rice production and

marketing provides another telling example of its general approach to economic

management and is worth exploring here in some detail. 15 Since Ne Win’s time, all

 14 The official rate is actually pegged to the IMF SDR, but it works out to approximately 6 kyats to the US

dollar.

15 The discussion of rice management is taken from a research paper by Pen Incognito, entitled “The

Sanction that Kills,” which was written by a Burmese student as an academic work. An accomplished
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

20

agricultural land in Burma has belonged to the state, which grants inheritable “land tilling

rights” to farmers. In return for these rights, farmers must meet annual production

targets set by the state and sell most of this production to the state at a fixed price. The

farmer is allowed to keep only enough rice to feed his or her household. Failure to

deliver the compulsory quota can result in a farmer’s arrest and termination of land tilling

rights. A central authority then distributes the rice to urban and rice-deficit areas

throughout the country for sale at a subsidized rate, according to family quotas. The

highest quality rice is held back by the central authority for export.

Recalling that rice prices had become a rallying cry for the 1988 uprising in

Rangoon, the SLORC/SPDC established elaborate structures for regulating rice supply

in urban areas through arbitrary controls over exports and domestic prices. As the

author of this case study describes, after 1988, the Rangoon Military Command began to

hold frequent meetings with the leadership of the Rangoon Chamber of Commerce.

Major traders were routinely rebuked in those ‘meetings’ whenever the prices rose to a

politically incorrect level. Rangoon Command also imposed a ceiling on bills the

transporters could charge in moving basic commodities. A special committee was

formed with the sole purpose of streamlining the loading and unloading of cargo in

Rangoon port. Import and export of basic commodities are kept under constant

surveillance. 16

It was therefore encouraging in early 2003, when the SPDC announced that it

would liberalize the rice market, ending government involvement in the rice trade and

allowing private entrepreneurs to run the rice trade, including exports. Subsequently,

rice production in the 2003 monsoon season rose to the highest level in ten years and

rice traders signed many contracts with foreign importers. The government, however,

had not provided a mechanism for keeping domestic rice prices within an acceptable

level to ensure supplies for the urban poor and it had done nothing to correct or even

take into account the serious underlying macroeconomic distortions. In January, 2004,

 

economist, the student cannot risk identification for fear of being jailed in Burma for his scholarly integrity

and candor.

16 Ibid, p. 8.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

21

when it was clear that rice prices were soaring in the unregulated domestic market, the

government made an about-face, banning further rice exports and returning to its original

methods of regulating rice production and sale. The government was clearly not

prepared to risk the potential for rice shortages to spark unrest in urban areas, especially

Rangoon. Indeed, rice prices dropped immediately by more than 40 percent when the

export ban was announced.

Noted international political economist Stefan Collignon has concluded that two

fundamental conditions underlie the severe economic distortions that the country faces

today. First is the failure of successive military regimes to develop confidence in the

domestic currency, without which there can be no development of domestic assets. The

government has established the practice of simply printing money to cover debt, thereby

increasing the volume of kyat in circulation in the absence of an expanding economy and

leading inevitably to rapid devaluation of the kyat against foreign currencies and

property. Inflation is so rampant that wealth owners are unwilling to bank or monetize

their capital and give impetus to economic development. So long as the military feels

the need to control the monetary system arbitrarily and in secrecy to ensure its own

strength and well-being, there can be no correction of this basic economic weakness.

Second is the lack of secure property and individual rights. The very concept of

rights accorded the individual in a liberal democratic setting in terms of both property and

human rights, has never had a chance to take hold in Burma. As Collignon explains,

17

the essential element that establishes people’s trust in democratic government is the

trade off between the interests of the collective, which are established by how the

majority votes, and the interests of the individual, which are protected by the individual’s

claims against society in the form of guaranteed human rights and property rights,

through which they may make claims against other individuals. Needless to say, this

concept is entirely absent under the current military rule in Burma and only dimly

perceived in the majority of the population.

 17 Stefan Collignon, in Robert Taylor, editor, Burma: Political Economy under Military Rule, Hurst &

Company, London, 2001, p. 73. The discussion of macroeconomics in this section draws heavily on the work

of Collignon, including the above chapter and his paper “Why Do Poor Countries Choose Low Human

Rights?: Lessons from Burma,” Revised Inaugural Lecture at the Faculty of Economics, Freie Universitet

Berlin, November 17, 1999.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

22

Thus the significance of the severe economic distortions in Burma is not only

economic, there are profound political implications. As Collignon has put it: Because

the monetary economy is severely distorted and property rights are neither clearly

defined nor enforced, ... the value references of an individualistic society are not ...

sufficiently reproduced in Burma’s daily life. Hence, dialogue and compromise, but also

the cognitive framework for human rights, remain alien concepts.

18 We will return to this

point later, but suffice it to say here that there is a fundamental and inseparable

connection between the deficiencies in Burma’s economy and the deficiencies in its

political governance. They must both be addressed simultaneously to make democratic

governance sustainable.

3.3 Governance and the Capacity of State Institutions

Burma’s state institutions, like almost everything else, have deteriorated badly

under military rule. At both national and local levels, the structures of government

function more or less as instruments of the military through the mechanisms of the

SPDC and the army’s regional commands, although with certain key exceptions. For

example, the military structures are almost nonexistent in some ethnic areas, such as

the Wa and Kokang, and most ethnic areas also have their own militia and local

government authorities. Furthermore, in recent years, the SPDC has been replacing

military authorities at the local level with civilians, who are often retired military.

In the central government the traditions of an educated and dedicated civil

service that carried over from the colonial period have largely dissipated as senior and

mid-level ministry positions have been filled with military officers and their families on the

basis of patronage and not merit. When Ne Win took control of the government, he fired

most of the talented civil servants who had been trained during the colonial years, and

many more experienced public servants were forced out of government for political

reasons in the aftermath of 1988. The rush to “militarize” ministries at all levels has

accelerated in recent years, as the SPDC appears to prepare for restoration of

 18 Ibid, p. 82.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

23

constitutional government. It is not surprising under these conditions that government

institutions are rife with corruption and sheer incompetence.

Perhaps most debilitating of all is the concentration of almost all decision making

power in the very top levels of the military leadership, where the SPDC and its

committees dictate policy to the civilian bureaucracy. This leaves the institutions of

government with very little authority over decisions and consequently little sense of

responsibility. The military’s supremacy over the allocation of national resources

deprives civilian ministries of adequate means to perform their functions properly. Civil

servants are paid so poorly that they must use whatever bureaucratic power they have

for personal gain in order to support their families, thus entrenching corrupt behavior as

a norm. This syndrome pervades military structures, as well, especially at mid and lower

levels where salaries do not support basic necessities. To the extent that individual

military officers are enriching themselves lavishly from their positions in government, it is

largely at the highest levels, both nationally and regionally.

On the whole, Burma’s state institutions have almost no capacity to provide

governance. All direction comes from the military leadership, which – like the Communist

Party in the former Soviet Union – serves as the central nervous system for the

organism of government. In addition, a culture of corruption and irresponsibility acts as a

cancer on the organism, guaranteeing that the bureaucracy will take every opportunity to

translate the functions of government into rent-seeking activity and not into service of

benefit to the community.

3.4 Health and Education

With the lion’s share of the government’s resources being devoted to the needs

and priorities of the military, there is very little left to meet the needs of civilians. The

country’s bloated army enjoys the services of a separate health and educational system,

which is, in some places, much better than those provided for the civilian population and,

in other places, at least marginally better. By contrast, the government’s health and

educational services for civilians have been deteriorating for many years, starved for

funds, and attracting fewer qualified and dedicated professionals. Today people are

forced to pay relatively large amounts of money to get any value out of government

health services and schools. Government hospitals, clinics, doctors, and nurses
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

24

generally charge a large fee up front before dispensing any care to patients. Those who

cannot afford the fee are left to fend for themselves. Medicines, modern medical

equipment and supplies are in short supply and can be very expensive when available,

because they all have to be imported. This leaves the poorest people in both urban and

rural areas with little access to real medical care, a fact which is reflected in the country’s

poor health indices. For example, the incidence of HIV/AIDS is approaching African

proportions with an adult prevalence rate of 1.2 percent in 2005.19 According to

UNICEF, in 2004 infant mortality was 76 per 1,000 for children under one and 105 per

1,000 for children under five.

Recent years have seen the rapid growth of private medical services to fill gaps

in the government system, including private hospitals and clinics financed by foreign

investment. The foreign-financed services are generally better than the government

facilities, but are often well beyond the means of most Burmese to afford. There are,

however, a number of inexpensive private clinics here and there, run by doctors, who

are not allowed to practice in the government system because of their perceived

sympathy for the country’s democratic forces. Unlike government facilities, these clinics

provide medical care first and collect fees later, thereby ensuring that the very poorest

can be served. UN agencies, such as WHO, UNDP, and UNICEF, have engaged in

limited programs with the government health system in an attempt to reach the

underserved civilian population, as have some international NGOs. International

assistance, however, can only be a drop in the bucket under the current circumstances,

because the military leadership imposes difficult restrictions on the operations of

international groups and attempts, when at all possible, to extract money or expensive

equipment from them as a cost of doing business with government ministries. All

international assistance groups are required to partner with one or more government

ministry or department.

The government educational system has also become increasingly expensive,

often leaving the poorest without access to primary, let alone secondary education.

 19 “Silence Adversary in Myanmar’s HIV/AIDS Fight: UNICEF Regional Director,”

www.unicef.org/myanmar/new.html
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

25

Schools must be financed by local communities or a private benefactor. The

government provides teachers and curriculum, but the teachers are not paid a living

wage by the government. Their salaries must be supplemented by the local community.

To increase their wages, teachers provide private tutoring outside of normal school

hours and make it clear that students will not graduate without such tutoring. In

Rangoon, where the dearth of schools has made it necessary to run double sessions in

primary and secondary schools, the amount of time spent on formal class work, as

compared with private tutoring, is said to be less and less. Furthermore, the

deterioration in higher education with the dispersal of the university system over the past

decade has had a serious impact on the quality of the teachers in the public school

system. On the whole, the public education system in Burma leaves a large proportion

of the population with limited or no access to schooling. Only an estimated 30 percent of

the country’s youth today completes primary school.20

Aside from providing too little education to its students, the curriculum of the

Burmese educational system is based largely on rote methods of learning, which leave

even those with advanced degrees unequipped to think analytically. Many of the

subjects fundamental to good governance and democratic political activity are simply not

taught. There is an enormous education gap, from primary all the way through tertiary

levels.

Since General Khin Nyunt’s purge in 2004, the operating environment for

international assistance organizations addressing health, education, and poverty has

deteriorated significantly. It appears that the prevailing powers in the regime believe that

international assistance constitutes a form of intervention in their “internal affairs” and

that international aid workers often act as “intelligence agents,” seeking to liaise with

insurgent groups. Many of the small advances that had been achieved earlier in

addressing some of the country’s most difficult problems have dissipated under the

weight of new restrictions on the ability of international organizations to operate outside

of Rangoon. In particular, the government has been trying to force international

agencies to work with or through the USDA (Union Solidarity Development Association,

the regime’s monster civilian arm), apparently attempting to channel the assistance to

 20 David Tegenfeld, in Robert Taylor, ed., Burma: Political Economy under Military Rule, op cit., p. 112.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

26

the regime’s favored groups and enhance the public appeal, authority, and resources of

the USDA.21 USDA itself seems to be expanding its control of the civilian population

throughout the country, in some cases even challenging the authority of regional military

commanders.

3.5 Rule of Law

There is no rule of law in Burma today.

22 Although there are laws, courts, and

other legal structures that were established under colonial rule, they have ceased to

function legitimately, because they have been manipulated and misused for decades by

the military to punish perceived enemies and harass the civilian population.

The outcomes of trials concerning political activists or critics of the regime are

decided arbitrarily beforehand, so-called evidence is manufactured, and only those

arguments leading to a guilty verdict are allowed by the judge. Often defendants cannot

have a lawyer of their own. People are routinely imprisoned for political reasons and

there is a constant level of between 1,000 and 1,500 political prisoners languishing in

prison, as some are released and others are taken in. The harsh legal system is fortified

by layers of surveillance, with military intelligence at the top, the police Special Branch

now doing most of the legwork, and community wardens keeping watch over all

individual families in their districts. The civilian population has virtually no recourse in the

legal system to defend its individual or collective rights against the will of the military

government. It is quite understandable, therefore, that the legal system and those who

enforce it enjoy little respect among the Burmese people.

3.6 The State of Civil Society and Non-Governmental Institutions

Strict limits on the ability of civilians to form community organizations have been

a hallmark of Burma’s military governments. It is perhaps telling that a law forbidding

 21 In a recent report, the International Crisis Group details the problems international assistance agencies

and INGOs are having with government interference, in efficiency, and unwillingness to make decisions.

“Myanmar: New Threats to Humanitarian Aid,” Asia Briefing No. 58, Yangon/Brussels, 8 December 2006.

22 For an excellent description of SPDC manipulation of the laws to control the population, see Zunetta

Liddell, “No Room to Move: Legal Constraints on Civil Society in Burma,” in Strengthening Civil Society in

Burma, Burma Center Netherlands and Transnational Institute, Silkworm Books, 1999.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

27

more than five people to hold a public meeting without government authorization has

been on the books since the brief democratic years and the preceding colonial period,

stemming from concern about seditious elements in the society. The military regime, of

course, makes ample use of this law to suppress the emergence of civil society

organization, in general, when it is perceived as a threat to military rule. After years of

pervasive military surveillance to prevent a recurrence of the popular movement that led

the 1988 uprising, people in urban areas, particularly Rangoon, do not trust each other

and are disinclined to form associations.

Recently there have been some glimmers of hope that this trend may be starting

to reverse itself. With the arrival of UN assistance agencies and international NGOs in

Burma during the decade of the ‘90s, local home-grown NGOs began to spring up to

help with the implementation of health and educational programs by the international

organizations. This seems to have spawned a growing interest in the development of

NGOs for community service. The largest and most prominent of these organizations

are in reality GONGOs (government-organized NGOs), such as the Myanmar Women’s

Maternal and Child Welfare Association, which employ the generals’ wives. However,

an increasing number of smaller NGOs, while licensed and monitored by the

government, still manage to operate relatively independently of it. They have been

greatly strengthened, supported and encouraged by the presence of international aid

organizations for which many act as local program implementers.

Two recent studies have found that welfare-oriented non-governmental

organizations and community-based self-help organizations are much more numerous

and extensive than generally assumed by outside observers.

23 The studies conclude

that, while religion is the single largest driving-force for these organizations, there are

two major social needs making it necessary for civil society to organize for its own

survival: first, the government’s utter failure to provide social welfare services and

 23 Brian Heidel’s study, The Growth of Civil Society in Myanmar, surveys 64 NGOs and 455 CBOs. In Civil

Society under Authoritarian Rule: The Case of Myanmar, Jasmin Lorch explores the development of civil

society organizations in four areas: from inside the government to address welfare needs, welfare NGOs

independent of government, community self-help organizations, and civil society organizations in cease-fire

areas.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

28

second, the need for coping mechanisms in rural areas where the majority of people live

at a subsistence level. They find that the majority of community-based self-help

organizations engage in activity related to religion or religious schools, but many are

organized for health, education, funeral services, and other community needs. Most of

the NGOs surveyed were formed to provide health and educational assistance,

attempting to make up for the government’s lack of funding in these areas. Some

cease-fire areas appear to have been successful in developing independent NGOs to

perform welfare and community services, probably because this was a provision of the

cease-fire agreements. To an extent, the development of welfare NGOs and community

self-help organizations has been tolerated – and in the case of GONGOs, encouraged –

by the government to compensate for the lack of government programs and services.

Consequently, the military often attempts to associate itself with the work of civil society

organizations, even if they are independent or religion-based.

In considering the state of organized civil society in Burma today, one simply

cannot avoid the overwhelming presence of the USDA (Union Solidarity and

Development Association), which was formed by the SLORC in 1993 as a “civil society”

organization to rally civilian support for the regime’s plans to discredit the results of the

1990 elections and suppress the democracy movement. Over the years, USDA has

grown in both size and importance. Official Burmese media claim the USDA has a

membership of 22 million, nearly half the country’s population, but a significant

proportion of this membership is coerced. For example, all members of the Myanmar

Red Cross, the fire brigades, professional organizations, and government ministries

must belong to USDA. With Senior General Than Shwe as its top patron, USDA

provides the military with a civilian structure that reaches all the way down to village

levels, operating in tandem with the regional military commands. USDA is often

employed by the military leadership to attack the NLD and other opposition forces,

pretending that it represents popular sentiment. USDA, for example, carried out the

attack on Aung San Suu Kyi’s motorcade in May 2003, for which the SPDC jailed Aung

San Suu Kyi and many other NLD members. Although the military leadership continues

to portray USDA as a civil society organization, it functions more like a political party

today, working hand in hand with the SPDC and regional commanders to rally local

people to the government’s causes. Its annual meetings resemble a party convention,

with delegations from each of the 16 states and divisions presenting reports on
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

29

economic and social conditions and endorsing government policy. Many Burmese

anticipate that the USDA will eventually become a political party – perhaps even the sole

political party – when and if the military decides to return to a parliamentary system it

can control.

Viewing civil society according to its broadest definition as a nexus of relatively

free individuals and groups without reference to the state,

24 encompassing a great

variety of social movements, village and neighbourhood associations, women’s groups,

religious groupings, intellectuals, and where they are reasonably free, the press and

other media, civic organizations, associations of professionals, entrepreneurs, and

employees, whose purposes and direction are not controlled by the institutions of state,

25

one must conclude that it is severely underdeveloped in today’s Burma. And it will not

have much chance to grow into a force for change, so long as the military government

operates on the assumption that it must control virtually every aspect of its citizens’ lives.

3.7 Religious Institutions

Not surprisingly, Burma’s military leadership takes great pains to control religious

activity, as it does everything else. Its first priority is making Burma’s Buddhist monk

order, the sangha, serve the regime’s political purposes. But this is nothing new in

Burma; the sangha have played a critical role in legitimizing government since the days

of King Anawrahta in the 11th century, and even during the democratic period of the

1950s. Monks themselves have not shied from taking a political role at various stages

in Burma’s history. During the colonial period, prominent monks led early nationalist

rebellions and during the 1988 rebellion, monks took an active part in the antigovernment movement. As a consequence, the military regime keeps a close watch on

the Buddhist clergy, they place spies among them, and they don’t hesitate to jail monks

who display views critical of the government. On the other hand, they also pay constant

obeisance to the sangha, particularly the senior monks whom they have anointed as the

sanctioned leaders of the order. The generals, in the tradition of all the governments

 24 Sudipta Kaviraj and Sunil Khilnani, editors, Civil Society: History and Possibilties, Cambridge University

Press, 2001, p. 33

25 Ibid, p. 276.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

30

before them, make a public display of devotion by attending religious ceremonies

regularly, building new pagodas to their own personal glory, and making large donations

to monasteries and temples. They see Theravada Buddhism as the essence of

Burmese culture.

Christianity expanded in Burma during the colonial period, particularly among the

non-Burman ethnic groups and is considered by the military as an example of

unwelcome foreign influence on the society. Although Christianity is now fairly

widespread in the country, even among Burmans, the regime regularly discriminates

against Christians in the military ranks and in government employment. They also

encourage the USDA and local authorities, including military, to restrict Christian

religious activity.

The regime is probably even more paranoid about the rising influence of Islam in

Burma. The proportion of Muslims in the population is increasing steadily and there are

often clashes between Buddhist monks and Muslim leaders. Burmese credit the regime

with provoking these clashes and that is undoubtedly true in some cases. However,

much of the antagonism is probably spontaneous, because there is a strong anti-Muslim

sentiment among the majority Buddhist population, which tends to view the Muslim

population as alien. Therefore, the fault line between Buddhists and Muslims could

easily intensify, regardless of the complexion of government. It is certain, in any case,

that anti-Muslim sentiment in the Buddhist population will not be addressed by the

government, so long as it is military.

The deep devotion of Burma’s Buddhist population to religion is often thought to 

be a form of escape from the tedium of life under harsh military rule and there may be

some validity in this view. Buddhist meditation provides a respite from daily life and

helps its practitioners deal with hardship and adversity. The traditional role of the

sangha in service to the community also affords Burmese people a means of giving to

the community through their contributions to monasteries and to the sangha themselves.

The schools run by monks are a good example: monasteries have traditionally offered

educational services to the poor who could not afford government schools or whose

families were even too poor to support their children. This practice has continued and

expanded as economic and educational conditions have deteriorated in recent years.
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31

The sangha represent a significant alternative education system. Burma’s Christian

churches and Muslim communities are similarly involved in community service, although

their activities are probably more constrained by government scrutiny than those of the

sangha. Indeed, religious organizations of all sorts appear to be the most extensive

form of community-based self-help.

4. Considering the Possibilities for Transition

Some form of political transition is inevitable in Burma. The question is when and

how. With the signs of Than Shwe’s ill health and aging becoming more publicly visible,

not to mention the failing health of all five top generals, it appears that a degree of

evolution in the top military leadership will come relatively soon. At least in the first

stages, this transition is likely to be relatively orderly, with either Gen. Maung Aye or

Gen. Shwe Mann taking the place of Than Shwe, depending on how much longer Than

Shwe remains in office. If, for example, Than Shwe dies in office or is forced to retire for

reasons of health, then we might see Maung Aye take his place, at least for a short

while. If Than Shwe can outlast Maung Aye in office, he is likely to hand the reigns over

to his chosen successor, Shwe Mann. In either case, there is not likely to be an

immediate difference in the leadership style, and we are unlikely to see political

instability in the near term.

Over the longer term, however, the country’s deteriorating living conditions, the

possibility of a period of uncertainty in military leadership, and international pressures

will probably push the country in the direction of more consequential transition. While it

is impossible at this stage to predict exactly how transition might unfold over time, there

are five broad categories of possibility, ranging from the most gradual to the most abrupt.

This section will explore those categories in order to assess how the various forms of

transition might affect the process of assisting the development of stable, sustainable

democracy in Burma, which we will address in the following section.

4.1 The SPDC model for gradual transition

As described earlier, the SLORC/SPDC began to develop its own model for slow,

deliberate and carefully managed transition from “interim” military government to multiparty parliamentary government shortly after the elections of 1990, when the
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

32

overwhelming victory of the NLD foiled the military’s plan to seat a parliament dominated

by its own party, the National Unity Party. According to the SLORC timetable, the first

step would be to convene a National Convention of political parties and other nationally

significant groups, including a large delegation of uniformed military, to draw up

guidelines for a new constitution. Once a constitution has been written and ratified, a

parliament would be seated, either through new elections or through a negotiated

formula that would substantially modify the results of the 1990 elections. In the

meantime, “interim” military government would also have to accomplish two other major

tasks: first, the restoration of law and order and second, the establishment of peace and

development. This was clearly not a plan for rapid, or even near-term political transition.

Nearly twenty years later (dating from the September 1988 coup that brought the

SLORC to power), the “interim” military regime is still in place and the basic guidelines

for a new constitution have not yet been completed.

Although we may never know for sure, it is possible that the deposed General

Khin Nyunt actually hoped to begin moving forward seriously with that plan when he

drew up the seven-step program for managed transition that he presented to ASEAN in

2003. While the military leadership still claims to be following that plan, it has yet to 

move beyond the first step and the transition seems unlikely to be completed so long as

the current elderly generals are in control. Although many observers predict that Gen.

Than Shwe will step aside to become head of a new military-controlled parliamentary

government, the number of steps involving public participation (constitutional

referendum, parliamentary elections, etc.) required to reach that stage will be daunting

for these elderly leaders who have spent their many years in the leadership scrupulously

avoiding situations involving mass public action. The longer they cling to the status quo,

the more tenuous their grip on power becomes, and the less confident they will be of

taking on new political challenges. Of course, the successors to Than Shwe and Maung

Aye could decide to bring this process to a conclusion more expeditiously. On the other

hand, if there is a lack of clear authority at the top after the departure of Than Shwe and

Maung Aye, even the current slow political transition could grind to a halt. Thus the

SPDC model for transition is doomed to be so gradual that it could be overtaken by

events before it has accomplished any measurable transition.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

33

4.2 Transition triggered by regime infighting or internal coup

Considering the iron grip that Senior General Than Shwe has maintained on the

reins of power for the past 15 years and the intense rivalry between the two top

generals, the possibility remains that SPDC may not experience a smooth or seamless

transition, should their successors fail to establish authority and allegiance with their

military peers. There could be a period of serious competition and infighting within the

military, perhaps even another internal military coup, during which time the country will

continue to drift. The period of drift could, in turn, witness the gradual rise of other

centers of power, more civilian in nature, such as the national police, crony business

empires, and the USDA. There are already signs that these entities are extending their

influence in Rangoon and other parts of the country, especially since the SPDC moved

to Naypyitaw. Such a trend might also give rise to greater lawlessness and certainly to

even more profound corruption. There is plenty of precedent for this pattern in Burma’s

long history.

At the same time, with the military losing its grip on surveillance and population

control, there will also be more space for civil society to expand its own organizational

base, perhaps to begin taking more control of villages and neighborhoods. As described

earlier, some of this is already apparent in neighborhoods and villages, where self-help

organizations are relatively widespread. Some Burmese observers believe that, to the

extent the police begin to assert their own authority and refuse to carry out harsh orders

from the military against the civilian population, restrictions on the civilian population may

begin to ease.

With much weaker and less firmly established military leadership at the top,

civilian and business activity might develop and begin to give rise to pressure for reform,

particularly in the economic area where business interests would certainly welcome

banking and monetary reform. Thus, while there might no longer be a nationally

articulated plan for transition in place, there could still be a great deal of positive

transitional activity underway. Alternatively, a weaker military leadership might have

more interest in moving forward with the SLORC/SPDC design for transition, agreeing to

work on a new constitution in a more inclusive process than the current National

Convention.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

34

4.3 Transition triggered by an unexpected, unforeseen event

In a setting, such as Burma, where society is so comprehensively impoverished

and repressed, the country has few devices for coping with significant man-made or

natural disasters. Despite the image of power and authority that the SPDC projects, in

reality the military and the government ministries are very poorly managed and

astoundingly incompetent at accomplishing even simple tasks. Faced with a large

disaster, the SPDC would be likely to respond entirely inadequately. If the

circumstances were dire enough to elicit a massive international response, it is possible

that various factors might coincide (e.g. extent and location of the damage, personality of

top military leadership at the time, degree of international pressure to intervene, etc.) to

create an opportunity in the aftermath for a period of reconciliation in which the military

leadership could be convinced to commit to real transition, including serious economic

reform. We have seen something analogous in Aceh, Indonesia, where the massive

international response to the effects of the tsunami, in coordination with Indonesian

government and military forces, triggered the psychological breakthrough needed for

negotiation of an autonomy agreement for Aceh.

4.4 Transition triggered by widespread social unrest/economic

distress

The events of 1987 and 1988, when poorly conceived economic decisions

suddenly impoverished people holding their savings in local currency, have provided a 

classic example of how easily urban populations can turn on inept government when 

they feel there is nothing left to lose. Taking a strong lesson from the events of 1988,

the SLORC/SPDC have gone to considerable lengths to eliminate what they perceived 

to be the origins of this political crisis and its particular manifestations. For example,

they appear to have adjusted the flow of traffic in Rangoon to eliminate the bottlenecks

that became the locus of showdowns and mass protests in 1988, they have dispersed 

the university campuses and placed controls on student gatherings to prevent student

movements from forming, they have positioned military units within and around Rangoon 

to react immediately to snuff out any sign of a public gathering or protest, and they have 

scrupulously avoided demonetizing the local currency or letting the price or supply of
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

35

critical commodities negatively impact poor neighborhoods in Rangoon. And 

notwithstanding all these measures in Rangoon, they have decided to remove 

themselves for safety’s sake to another, heavily guarded, capital in Naypyitaw.

Although it is now very unlikely that the conditions triggering the 1988 protests

would repeat themselves exactly, it is still entirely possible that a different set of

conditions could arise that would elicit mass public reaction of some sort, particularly

with weakened and indecisive military leadership at the top. As power evolves at the

top, forces within the society inevitably shift, bringing about imperceptible changes and

creating a new environment in which weakened, untested military leadership could easily

miscalculate the consequences of economic or other decisions affecting the society.

Public groups might be more emboldened to protest, particularly if widespread looting

and banditry were to arise from an economic crisis. This kind of activity would very

quickly test the ability of the police and military to control the streets and could render

Rangoon and other cities anarchic, at least for a while. If the military leadership were

still unwilling to work with civilian leadership to bring things under control and move

forward with political transition, the situation would be likely to descend into chaos and

anarchy, as has happened in the past. Unfortunately, this would probably have the

effect of renewing the military’s conviction to retain its firm grip on the country. It could

also cause enough strain within the military leadership to set off another internal coup,

as we saw in 1988.

4.5 Violent Overthrow

The democratic opposition in Burma has consistently advocated non-violent

means of bringing about political change and there appears to be a very limited popular

base in the country to support a serious attack on the government or its leadership.

Furthermore, the leadership -- being military – has gone to considerable lengths to

protect itself from such attack. Violent overthrow would require a well equipped and

managed organization, which would probably be impossible to mount under current

conditions. If violence were to become a real possibility, then it would probably come

only after an extended period of confusion and chaos, where it was clear the military and

police no longer had the ability to maintain control.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

36

Unfortunately, the least likely, most improbable scenario for transition in Burma is

a rapid and direct peaceful transition to democratic government. We are more likely to

see either a protracted transition to pluralistic government or a period of disorder brought

about by economic conditions, which sets the stage for a return to authoritarian rule. As

Collignon has argued quite persuasively,

26 decades of backward military rule have

robbed the Burmese population of the economic and political development necessary to

make a direct transition to sustainable democracy.

5. Challenging Traditional Notions of Transition and

Democratization

To add another dimension of complexity to the question of addressing political

transition and capacity building, we must consider what the key determinants of progress

toward democracy are likely to be in Burma. Thomas Carothers, a noted observer of

democratization, has convincingly challenged the five “core assumptions” of the

transitional paradigm that has formed the analytic model for the US policy and

democracy advocacy community, particularly in the post-cold war period. 27

First, he takes issue with the common notion that political transition away from

dictatorial rule should be considered a transition toward democracy. He argues, rather,

that recent trends demonstrate that of the nearly 100 countries generally identified as

“transitional,” only 20 have remained clearly on the road to democracy. The rest have

either stalled in a “political gray zone” or regressed toward dictatorship.

Second, the assumption that democratization is a natural process that unfolds in

a set sequence has proven unfounded, because most cases of transition have been

“chaotic processes of change that go backwards and sideways as much as forward, and

do not do so in any regular manner.” 

 26 Collignon, “Why Do Poor Countries Choose Low Human Rights,” op cit. throughout. Collignon’s

comparison/contrast of the development experiences of Burma and Thailand is especially instructive.

27 Thomas Carothers, “The End of the Transition Paradigm,” Journal of Democracy, Volume 13, Number 1,

January 2002 is the inspiration for this section of the paper.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

37

Third, Carothers disputes the idea that elections are the key determinant of

democratization and a prime generator of further democratic reforms. He claims that, in

fact, elections cannot compensate for or correct serious structural deficiencies in

countries attempting to get beyond dictatorship, particularly where there are wide gulfs

between political or power elites and the citizenship. Consequently, the democracy

policy community has come to expect too much of elections, per se.

Fourth, the assumption that underlying political, economic, institutional, ethnic,

and cultural conditions in transitional countries are not major factors in either the onset

or outcome of the transition process, he argues, has proven unfounded. On the

contrary, experience with successful transition in Central Europe, the Southern

hemisphere, and East Asia has demonstrated clearly that economic wealth, previous

exposure to political pluralism, and institutional legacies all contribute significantly to the

achievement of democratization. In particular, he challenges the notion that democracy

assistance should be focused exclusively or even primarily on political process to the

exclusion of economic and socio-cultural development.

Fifth, the assumption that political transitions from dictatorship proceed on the

foundation of a functional, viable state and that the road to democracy is merely a matter

of redesigning and reforming existing state institutions is misguided, according to

Carothers. In fact, he argues, most transitions, both successful and unsuccessful, have

immediately confronted the critical problem of weak and ineffectual state structure and

revenue bases, which tends to encourage those in power to engage in behavior

antithetical to democracy, in order to assure the state’s access to power and resources.

Carother’s arguments are nowhere more cogent than in the case of Burma.

Whatever the form that transition eventually takes, it will not be a simple step from

dictatorship to democracy. The underlying political, economic, ethnic, and cultural

conditions are, as we will discuss in the next section, not adequate to the demands of

liberal democracy. The state itself only functions as an adjunct of military discipline and

not as an entity with its own culture and powers. The state institutions and civil service

founded during the colonial years and transposed into the young democracy have long

ago been subverted and twisted into instruments of nearly blind allegiance to the will of
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

38

its military leaders. Burma’s history is replete with evidence that political transition leads

more likely in the direction of autocratic government than democracy, and elections have

been more an instrument of authoritarian political manipulation than a means to

implement popular will. All in all, it is clear from Burmese history – both ancient and

modern – that political transition is never smooth and does not follow a single trajectory.

It has gone forward, backwards, and sideways for centuries and certainly cannot

reasonably be expected to proceed naturally forward toward viable liberal democracy

from its current state of being. Much work on underlying political, economic, and social

institutions will be required, along with enormous time and patience.

6. Burma’s Most Urgent Needs and Potential Areas of 

Strength

Recognizing that the task of building the foundation for liberal democracy in

Burma is mammoth, the question becomes where to begin. This section will attempt to

identify the most urgent needs and to set priorities, pointing out how different transition

scenarios might affect the ability to address these needs. Issues will be divided roughly

into four categories: economic, political, health and education, and security.

6.1 Economic

As Collignon has argued, the most fundamental requirement for building

sustainable democratic institutions in Burma is the correction of two critical deficiencies:

1) the badly distorted monetary and fiscal systems and 2) the lack of individual property

and human rights (and the corollary individual responsibilities that accompany them).

Both of these tasks will take considerable time to achieve and should be approached

simultaneously in sequential steps. For example, monetary and fiscal reforms should

probably be accomplished gradually with carefully orchestrated restructuring of the

banking system and taxes, designed to encourage and support both local and foreign

investment and regularize public revenue. Monetary and fiscal reforms should be

accompanied by a concerted effort to revamp property rights and establish reliable,

consistent economic legal protections.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

39

In 2003, an accomplished Burmese economist described the major

characteristics of the “unstable and unsustainable macroeconomic environment” as

follows:

(a) Domestic inflation is raging at double digits;

(b) The official exchange rate has no relation to the market or parallel rate at

which most exchange transactions are conducted; the exchange rate is subject to violent

fluctuations; and the external value of the kyat has nose-dived and probably will continue

to sink further...

(c) The official interest rate has no relation to the informal rate at which most

business deals are conducted;

(d) Many private commercial banks have not fully recovered from the recent

liquidity and financial crisis;

(e) Uncertainty and confusion created by lack of transparency, accountability and

consistency with respect to government’s rules and regulations, unavailability of timely

and reliable macroeconomic data and essential information, and difficulty in trying to

understand and to predict government’s moves and decisions that vitally affect business

interests;

(f) Systemic official corruption; and

(g) A large underground or parallel economy which is crucial for the survival of

the private sector, and which operates mostly outside the sphere of the government and

its rules and regulations.

28

In 1999, the World Bank presented a draft report to the Burmese government,

recommending a number of fundamental economic reforms, including the abolition of:

• the artificial official exchange rates;

• the inefficient mechanism for rice procurement, distribution, and export;

• restrictions on private sector activity; and

• inefficient state enterprises.

And finally, it urged significant expansion of budgetary expenditures on social 

services and infrastructure.29

 28 Anonymous discussion paper on market liberalization, September 19, 2003, pp 5-6. (Identification of the

author could expose him to persecution by the regime.)
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

40

Attempting to carry the World Bank recommendations forward, the Japanese 

government established a bilateral working group, including both government and nongovernment participants, to examine what would be involved in implementing two or 

three of the recommendations without causing socio-economic destabilization.

Apparently the bilateral study succeeded in developing a detailed plan for 

implementation that was acceptable to the Burmese participants. The recommendations

made their way into a bilateral meeting between the Japanese Prime Minister and Senior 

General Than Shwe at an ”ASEAN plus three” meeting a couple of years later.

According to those involved in the project, the recommendations were more or less

summarily rejected by General Than Shwe. Despite this setback, it appears that a 

bilateral Japan-Myanmar consultative group continued to develop a detailed program for 

economic reform while General Khin Nyunt was still in office.

The reforms recommended by the World Bank in 1999 identify the key areas that

are causing the severe distortions in the Burmese economy today. As anticipated in the

Japan-Myanmar study group, these reforms would have to be phased in gradually to

avoid destabilization or public panic over monetary reform. There is a variety of limited,

but valuable, private enterprise activity in banking, manufacturing, tourism, technology

marketing, construction, and other areas that probably should be protected from possible

adverse effects of sudden implementation of radical reforms. Once structural distortions,

artificial restrictions, and the uncertain regulatory environment begin to recede, the

business sector can be expected to expand naturally and rapidly. The capital and

human potential is already there.

Economic reform in Burma will be enhanced greatly if it is accompanied by a

strong, comprehensive educational program to provide Burmese with the economic and

business skills to operate in a radically different context than they have experienced thus

far in their history. Just as the limited opportunities for free market enterprise have been

embraced by Burmese, educational opportunities to acquire business skills would be

warmly welcomed by Burmese civilians. Under conditions of relative economic and

 29 “Myanmar: An Economic and Social Assessment,” unpublished draft report of the World Bank, December

1999. Because the SPDC refused to accept and approve the World Bank draft study, it was never published

in final.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

41

political stability during transition, a robust business class could be expected to emerge

rapidly. One note of caution concerns the danger of cronyism. Some of the wealthiest

of the current private sector businessmen have succeeded through crony relationships

with senior military leaders, whom they have in turn been enriching. Because this part of

the business class and its patrons depend on access to government resources and

favors, the military can be expected under any transition scenario to resist yielding

control over government monopolies and other mechanisms that facilitate personal

corruption. In fact, in any reform scenario the military can be expected to insist on

continuing to profit from personal business connections.

The development of a culture of individual rights and responsibilities will involve

multiple tasks and must be underpinned by a new constitution, as will be discussed in

the next section. Among other things, the constitution must lay the basis for redrawing

the legal system to establish clear property rights and the protection of these and other

individual rights. While some private property provisions exist now, they are by no

means consistent or assured. The military regularly dispossesses people for its own

purposes, adding to the general uncertainties and instabilities in the economy. In the

critical area of agriculture, which sustains the majority of the country’s inhabitants,

property rights must be made more conducive to productivity, encouraging a return to

robust agricultural exports. The current system, which ties “tilling rights” to government

production quotas and holds the farmers’ compensation well below market rates, is a

proven recipe for agricultural failure. It is possible that historical experience will lead the

Burmese to define property rights somewhat differently than is done in the United States,

for example, but the definition must be clear, consistent, and legally protected.

Rule of law must be reestablished as quickly as possible, not only to stabilize the

economy and facilitate economic growth, but also to provide the tools to begin tackling

the corruption that has been institutionalized throughout the military economy. The

degree to which various levels of government and society currently engage in rent

seeking in virtually every arena of Burmese life, if it cannot be brought under control and

significantly reduced, will encourage economic chaos and stymie economic reform once

transition begins. Fortunately, there are skilled lawyers in Burma who understand where

the current problems lie in the legal system and they are well trained in British common

law, the basis of the original Burmese legal structure. They would need only a modicum
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

42

of assistance and encouragement from outside experts. The greatest need would be

resources to restructure the courts and train new lawyers.

Perhaps the only hope of being able to address macro-economic reforms

comprehensively and strategically would be if transition scenarios two or three were to

occur in such a way that they led to the development of a negotiated reform agenda

between government and non-government forces. This would make it possible to

address outstanding constitutional questions that affect rule of law and property rights. It

might allow, for example, the establishment of national commissions for economic and

legal reform that could harness the right combination of expertise and authority. Such

commissions would help manage public anxiety and temporary hardships caused by

economic change. They could also help guide decisions on foreign assistance and force

the international community to coordinate its efforts. One recent study has asserted that

...it is essential that a country be able to identify its own set of objectives with respect to

development and poverty reduction. Otherwise, only the IFIs, and not the county and its

people, determine the agenda. The study concludes that: It is up to the people of Burma

to work with and direct the international financial institutions so that when a national

development strategy is ultimately adopted, it reflects the real needs and priorities of the

people, and not merely the interests and priorities of the financial institutions and donor

countries.

30

In the other three transition scenarios, internal conditions would probably be

either too constrained or too chaotic to allow a comprehensive approach to

macroeconomic reform. With continued tight military control over government and

policy, the prevailing tendency is likely to be risk aversion, which more or less rules out

macroeconomic reform or substantial legal and constitutional progress. If internal

conditions are politically unstable or chaotic, some change might be possible, but it is

more likely to be of a spontaneous nature, because government would be too weak and

ineffectual to develop and guide fundamental reform. For example, there might be

pressure from farmers for liberalization of agricultural policy, which could force change, if

 30 Yuki Akimoto, Opportunities and Pitfalls; Preparing for Burma’s Economic Transition, Open Society

Institute, New York, 2006, pp. 16 and 72.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

43

the military were no longer able to maintain its grip on the current economic and trade

policy levers. But it would be difficult to address monetary and fiscal reforms, property

rights, rule of law, and constitutional issues without strong central government. And, as

the SPDC has discovered, liberalization in discrete sectors of the economy is difficult to

sustain without addressing the key underlying macroeconomic distortions.

6.2 Political

Political reform must begin with a new constitution. After years of struggle over

unresolved issues in the 1947 constitution, the flaws of the 1974 one-party constitution,

and the total absence of a constitution since 1988, the issues to be resolved are quite

clear. The steps toward resolution of these issues are not so clear. If one begins with

the 1947 constitution, for example, the chief issue would be clarification of the degree of

autonomy and self-determination for the ethnic minorities, which might be resolved by

specifying the division of responsibility between the central government and state

governments. It is unlikely, however, after so many decades of military rule that a

constitutional process could get underway without some form of participation by the

military. This fact, in itself, will add new layers of difficult issues to resolve in the

constitutional process and suggests that it would probably have to be approached in

stages, with a succession of governments serving under a succession of transitional

constitutions until the final goal was reached. Perhaps it could be achieved in one or two

stages; perhaps it would require more.

In any case, the deliberation currently underway in the National Convention to

determine the constitutional principles gives us an idea of the constraints and concerns

the military would bring to the process. Above all, they will resist strongly the devolution

of power and authority from the central government to state and local government,

making it very difficult to arrive at a formula for self-determination that would satisfy most

of the ethnic minorities. Although we do not know exactly the contents of the cease-fire

agreements, they seem to have conferred some degree of self-determination. However,

it is neither consistently applied, nor apparently guaranteed. Since the agreements were

originally signed, the SPDC appears to have rescinded some of the autonomy the

cease-fire groups assumed they had achieved, particularly with regard to control over

economic and security matters.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

44

The military will also insist on receiving a constitutional guarantee of powersharing in an elected parliament by being able to appoint its own representatives to a

significant block of the parliament. They may even insist on holding the top leadership

position in some form for a substantial period of time. For people accustomed to freely

elected government, this appears unreasonable and antithetical to democracy, but to

Burmese who have suffered so long under military rule, it might be considered

acceptable as an interim measure, if it were the price of achieving ultimate democratic

freedoms at the end of a well-defined process of transition and if the military did not

exclude the major democratic forces from the process.

Any new constitution, however, whether transitional or final, should not attempt to

place constraints on universal human rights, on legal reform and the rule of law, or on

economic reform and free market principles. On the contrary, the constitution should

guarantee a set of basic rights and should reinforce the principle of rule of law, laying the

foundation for a long process of legal, economic, political, and social adjustment and

reform.

A second fundamental and concomitant reform must occur in Burma’s general

political culture and civil society institutions. This is not to suggest that Burma should

model itself on foreign cultures or institutions, but rather that it needs to develop its own

form of “civilized” society, which it has been denied by increasingly paranoid military rule

that fears the idea of civilian initiative, responsibility, and sense of community. To a

certain extent, the development of civil society will accelerate when current restrictions

on group activity are eased, but there are certain aspects of “civilized” society that still

need to be fostered. For example, even during the democratic period of the 1950s

Burmese political actors did not display much national vision, political tolerance, or ability

to negotiate differences; and the institutions of civil society that existed at the time did

not force them to do so. Thus special attention must be paid to the social and political

skills that facilitate cooperation in an ethnically and religiously diverse society, probably

at least partially with the assistance of external partners. Even something as simple as

outside facilitation in the constitution-making process could, for example, help to

encourage a new political culture in Burma.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

45

Fortunately, the fundamentals of elections are not alien to the Burmese. Once

the prerequisites for elections are in place and assuming the military does not severely

distort the process, the Burmese people will know generally how to form political parties

and how to choose their parliamentary representatives. Despite attempts by the military

in 1990 to split the political opposition into many small ineffective parties and to

manipulate the voting process in favor of the government party, the electorate managed

to combine major opposition parties into a single more powerful unit, the National

League for Democracy, and to exercise its vote relatively freely. Burmese do not require

much coaching to conduct free and fair elections. The main task will be how to keep the

military and its agents from interfering.

These political reforms are a long-term proposition and will be considerably more

difficult to accomplish under transition scenarios one, four and five, where civilian activity

either remains under severe military constraints or is impeded by chaotic conditions

and/or extreme corruption. The most favorable situation for the development of civilian

institutions that contribute to a democratic political culture would be a gradual negotiated

transition to liberal democracy in which various sectors of the society – economic,

political, and social – are developed simultaneously.

6.3 Health and Education

As discussed earlier, the health and education sectors have been so distorted

and financially deprived by military rule in Burma that they both require urgent attention.

In other countries, it might be possible to address such tasks even before it was possible

to undertake political and economic transition. In Burma, however, the military

leadership imposes such onerous constraints on humanitarian assistance that it can only

be delivered sparingly to the needy and it can have only a very limited effect on

institution-building. Furthermore, because of the current monetary and banking

structure in Burma, any significant increase in foreign assistance, even if it is confined to

humanitarian goals, will also have the perverse effect of offsetting the SPDC’s perennial

domestic borrowing and deficit spending, as did the surge in ODA and foreign loans in

1977-87 during the Ne Win period.31 Furthermore, the restrictions placed on the

 31 In “Human Rights and the Economy in Burma,” op. cit., Stefan Collignon demonstrates how the 1977-87

“aid bubble” created the appearance of economic growth in Burma, but did not contribute to economic

development, because local wealth owners never trusted the distorted economic environment enough to
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

46

operations of international agencies and NGOs by the SPDC since 2005 are an

apparent attempt to force international agencies not only to channel funds to the

government, but also to incorporate USDA representatives in their assistance programs.

USDA participation in international assistance programs can be expected to limit how

and to whom aid can be delivered, as well as to maximize credit to the SPDC.

A recent report by the International Crisis Group, surveying the assistance

picture through the eyes of international agency staff on the ground in Burma, details the

problems that have developed in aid delivery since the purge of Khin Nyunt. These

include: 1) difficulty getting decisions from government because of less access to

decision-makers and a reclusive, unresponsive attitude on the part of the top leaders,

which has been compounded by the move to Naypyitaw; 2) more intense and intrusive

police surveillance of aid activities, with restrictions on travel by foreign staff,

interrogation of local staff, and demands to sit in on internal meetings; 3) growing

pressures from USDA and GONGOs who are trying to position themselves as welfare

providers, undoubtedly in anticipation of a constitutional referendum; 4) serious

restrictions on programs, including tougher control measures and the forced closure of

entire programs in some cases; 5) the imposition of new government guidelines that

subject all aid programs to “coordination” by local committees at the central, state, and

township levels, which include members of GONGOs. The report concludes that, all in

all, these new conditions “raise concern about [the aid community’s] ability to continue to

deliver assistance effectively and responsibly.”

32

Once it is possible to assure reliable delivery of higher levels of health and

medical assistance without the threat of diversion by the military and its agents, it will be

a relatively straightforward matter to rebuild and improve the public health structures.

There are still some talented and dedicated people left in this system and more can be

 

monetize their wealth through domestic financial institutions.

32 International Crisis Group, “Myanmar: New Threats to Humanitarian Aid,” Asia Briefing No. 58,

Yangon/Brussels, 8 December 2006, p. 5.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

47

marshaled quickly from the local staff of UN agencies and NGOs. Assistance with

medical supplies, training, and management will be the most critical inputs required from

external sources, at least in the first instance.

With regard to education, massive reform and restructuring will be required at all

levels. The chief problems in primary and secondary education are twofold: 1) a

curriculum that depends very strictly on rote learning; and 2) poorly trained and

underpaid teachers who are spending more and more time outside the classroom with

private tutoring. These problems are easy to identify, but will be very difficult to correct

until better teachers can be trained and resources are available to pay them adequately.

Tertiary education is even more a shambles after years of mindless manipulation

by military regimes attempting to minimize what they view as a breeding ground for antigovernment thought and activity. It will need comprehensive reform and restructuring in

which international assistance in the form of resources, training and advice on

restructuring and curriculum reform would be essential. Although there are still well

educated and talented academics to be found in Burma, they are sorely lacking in the

resources or authority to resist the government’s efforts to downgrade the quality of

tertiary education. The tertiary educational system needs to be built back into a vibrant

center of intellectual debate and development.

Because the Burmese place a premium on education and once had an excellent

public education system in the major cities and most well populated areas, they can be

expected to place a priority on restoring education when it becomes possible. Monetary

and fiscal reforms that provide assured government revenue and stimulate economic

growth and development will be critical to building adequate public health and

educational systems. Religious institutions of all kinds, Buddhist, Christian, and Muslim,

can be expected to help with education and other forms of community service, and are

doing so even now.

Under transition scenario one, which is essentially a continuation of current

conditions, or scenarios four and five, in which disruption and chaos would be likely to

bring a return to authoritarian military control, it would be extremely difficult to reform and

rebuild the health and educational systems. Because reform will require that resources
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48

and new thinking are allowed to flow freely and reliably into health and education

structures from the center, transition scenarios two and three, which envision some

possibility of negotiated political and economic transition, appear to offer the most

potential for improving health and education. Furthermore, programs to reform both

areas, reinforced by substantial international assistance, would help a transitional

government gain popular support during a period of inevitable sacrifice and uncertainty

engendered by change.

6.4 Security

Political development and democracy in Burma have been stymied by a

tendency for the country to dissolve into chaos and confusion when it is not held

together by a firm hand. Each time this has happened during the period since

independence, the military has interpreted the confusion as a rationale for grabbing

more power, gradually managing to transform its firm hand into an iron fist. Ne Win was

the first to take control in the midst of chaos, having developed a centralized military

procurement and manufacturing base during the democratic years. After 1962, he

consolidated the syndrome of centralized and systematic military control, although he

maintained at least the pretense of parliamentary government, albeit under single party

rule. The SLORC took power in the wake of the confusion caused by the massive civil

protest of 1988 and Ne Win’s abrupt departure from government. Starting from the

premise of Ne Win’s parting order that the country should return to multi-party

democracy, the SLORC nonetheless continued to believe that the country would fall

apart without the military in the driver’s seat, it resisted transition and gradually became

an authoritarian instrument to wield even greater control over the country than Ne Win

had.

Thus, the single greatest challenge for successful political transition in Burma will

be the problem of breaking this syndrome by ensuring a modicum of law and order that

still allows peaceful and stable political development. This is a very difficult proposition,

because it will require not only the prevention of social and economic chaos in urban

areas, but also the avoidance of relapse into ethnic minority insurgencies in outlying

areas, if certain groups attempt to take advantage of a transitional period to grab de

facto autonomy in the absence of constitutional guarantees. The particular form that

security guarantees might take to accomplish these goals is difficult to predict without
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

49

knowing what form transition will take. However, it is clear that abolition of military and

police forces would most certainly lead to chaos and anarchy, and would open the door

to a variety of militia and organized banditry. In any scenario it should be a fundamental

objective of transition in Burma to retain as much organized, responsible government

military and police force as necessary to assure law and order. Ideally these forces

should not interfere in the process of political transition. Realistically, however, some

degree of military interference is probably unavoidable considering the history and

mentality of the tatmadaw today.

Therefore, when and if real transition becomes possible, it will be essential for

the international community to act as immediately as possible to begin retraining and

reorienting military and police leadership to understand and respect the rules of

democracy. While it would be best to begin this process well before serious transition is

underway, the restrictions most donor countries have placed on military assistance to

Burma and the reluctance of the current regime to accept such training probably make

this unlikely. Perhaps some Asian donors would have more flexibility eventually to

undertake such training. (Indeed, some are probably already engaged in training

Burmese forces, although not with a view to reorienting military attitudes.) In any case,

once transition is possible, this should be addressed urgently. If their curricula were

reformed, Burmese military training institutions could provide an excellent venue for

introducing such training into home-grown programs.

7. Sources of International Assistance

In the post-cold war period, the international community has been called upon

constantly and increasingly to assist countries in transition from some degree of

authoritarian government to elected pluralistic rule. Government aid programs,

international agencies, and international NGOs have developed a variety of programs

designed to build the elements of democracy and to reform faltering economies.

33 There

is a large body of cumulative knowledge in this field, although different governments and

 33 Opportunities and Pitfalls, op cit, provides an excellent overview of the various types of agencies,

organizations, and government programs engaged in international aid.
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50

institutions may have different views on how to approach development assistance.

However, there is always some degree of coordination, for better or worse. Cambodia,

East Timor, Indonesia, various parts of the former Yugoslavia, would probably all provide

examples of complex international assistance programs, both coordinated and

uncoordinated.

In April 2005, the OECD led a consultative process among aid donors that

resulted in an agreement on “Principles for Good International Engagement in Fragile

States,” drawing especially on the experience of the past decade. Designed to guide

international donors in prioritizing and coordinating programs to help national reformers

in fragile states build “legitimate, effective and resilient state institutions,” the 12

principles stress the importance of local context, moving rapidly from reaction to

prevention, state-building as the central objective, avoiding activities that undermine

state-building, recognizing the political-security-development nexus, coherence between

various programs of donor government agencies, practical coordination mechanisms

between international donors, and mixing and sequencing aid instruments. Because

these principles provide an excellent framework for conceptualizing wide-ranging

international assistance to Burma one day, they are attached here as an appendix.

When the time comes for serious transition, it would be best, of course, to

address Burma’s political and economic deficiencies strategically – and not piecemeal –

in order to minimize hardship and avert chaos. Ideally, those concerned with this task

should coordinate on a strategy that sets priorities, that sequences reforms, that

rationalizes the strengths of various international donor organizations, and that builds

effectively on Burma’s existing advantages. Unfortunately, events and the human

condition, rarely, if ever, allow this. More often than not, there are overlaps,

inefficiencies, inappropriate focus, and competing objectives in any given situation.

Recognizing this reality, the best we can do is reinforce the OECD recommendation to

establish practical mechanisms for coordination. The following suggests a range of

governments and institutions that might be appropriate for the priority tasks that will need

to be addressed to achieve a successful political transition to stable democratic

government in Burma.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

51

7.1 International Financial Institutions

The World Bank, IMF (International Monetary Fund), and ADB (Asian

Development Bank) will be key to economic reform in Burma. All three have been

analyzing the Burmese economy for many years and are well aware of the

macroeconomic distortions that must be tackled. All three are currently prevented from

engaging in programs in Burma, because the major donor governments will not allow it.

Moreover, the SPDC has consistently refused to undertake any reform measures

suggested by IFIs, so even if the donors agreed to ease their restrictions, the banks

would not be able to engage seriously with the SPDC on reform under current

conditions. At this point, any serious economic assistance that is not focused on reform

will be largely wasted investment.

When macroeconomic reforms become possible in Burma, the correction of

monetary policy must begin with the Central Bank of Myanmar and the two militarycontrolled banks that manage currency transactions for the SPDC. A unified exchange

rate must be established, interest rates for lending and savings must be pegged to real

market conditions, and policies based on accepted international monetary practices

must be introduced.

As for fiscal policy, the state’s demand on national resources, which is currently

massive and uncontrolled, must be brought into synchronization with the state’s ability to

realize revenue. In the words of economist Sean Turnell, Macroeconomic policy-making

in Burma is coloured by one overwhelming fact – the irresistible demand of the state

upon the country’s real output. This demand far exceeds the state’s ability to raise

taxation revenue, and accordingly has led to a situation in which the state ‘finances’ its

spending by the simple expedient of selling its bonds to the central bank. This policy (in

economics parlance ‘printing money’) distorts every other aspect of policy-making in

Burma.

34

 34 Dr. Sean Turnell, “Burma’s Economic Prospects,” p. 4. Testimony before the Senate Foreign Relations

Subcommittee on East Asian and Pacific Affairs, 29 March 2006.
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52

It will probably take the huge resources of the IFIs to manage these tasks,

backed up by a substantial cash reserve to offset any negative social impact of the

reforms. This means that the IFIs should be at the center of international assistance to

Burma during a transition, particularly inasmuch as they also play a coordinating role

among the major donors who must approve the banks’ involvement and major programs.

The task of correcting major macroeconomic distortions must be underway before other

contributions to economic development, either in the form of ODA (official development

assistance) or FDI (foreign direct investment), can be effective.

Despite the heavy hand of uninformed military economic management, civilian

economic talent can still be found in Burma, both inside and outside the government.

There are some skilled economists with integrity in government departments and

institutions, including the Ministry of National Planning and Economic Development, the

Central Bank, etc. Rangoon University has a graduate institute of economics with a

cadre of past and present faculty schooled in the fundamentals. There are some

talented economists in private banking and business. It would make sense for Burma to

establish a national advisory council of skilled Burmese economists to play a central role

in designing programs for macroeconomic reform in order to exercise control over IFI

activity. The Burmese economic experts will understand better than any outsider the

potential advantages and risks of any given reforms and they will add a sense of

ownership to foreign assistance.

7.2 UN Agencies

A representative group of UN agencies currently operates in Burma under MOUs

with specific government ministries. The most important of these are: UNDP, UNICEF,

WHO, FAO, UNHCR, UNODC, and UNAIDS. Their current programs focus on basic

humanitarian needs, health, education, agriculture, environmental preservation, poverty

reduction, income generation, microfinance, refugee resettlement, and drug control. On

the whole, their programs are constrained by severe government restrictions, inadequate

donor funding, and limited access to the Burmese population and thus have little impact

on overall needs. Indeed, taking into account the severe macroeconomic distortions and

current SPDC restrictions on the operations of humanitarian aid agencies, it is correct

that donors should restrict funding to international assistance programs in Burma.
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53

The UN agencies do, however, play a very important role in marshaling and

educating human resources for the future. There are many local employees in all of

these organizations who either cannot or will not work for the government because of

their political convictions. Many of them are dedicated to the cause of improving the

lives of the poor, including ethnic minorities in remote areas of the country, when they

can reach them. These people will be an invaluable resource during transition and will

be critical to the reform and restructuring of government ministries when this becomes

possible. They are well versed in how the ministries now operate, because many came

out of government service and/or now work closely with counterparts in the ministries to

implement foreign assistance programs. They tend to know where and who the

competent civil servants are.

Furthermore, it is extremely useful to have the UN agencies in place in Burma

and familiar with conditions on the ground. When transition begins in earnest, they will

be well placed to establish priorities, expand their operations and advise the individual

donor government programs that will inevitably follow.

7.3 International NGOs

A handful of international NGOs is currently on the ground in Burma, including

several European groups, a few American groups, several Japanese groups and one or

two Australian groups. They work both on their own and in coordination with the UN

agency programs. Some of them focus particularly on assistance to ethnic minority

areas.

35 Like the UN agencies, these NGOs nurture and develop local talent. The bulk

of their staff is Burmese and, like the UN agencies, they work with local Burmese NGOs.

It is very difficult for foreign NGOs to negotiate and conclude an MOU with the Burmese

government to work in the country; the process can take three or more years. Thus

there is not likely to be a large increase in INGO activity in Burma so long as the current

SPDC leadership is in place.

 35 David Tegenfeldt, former Burma country representative for World Concern, provides an instructive

summary of INGO presence and activity in Burma, as well as a sense of the particular role they can play

with minority ethnic groups, in his chapter entitled “International Non-governmental Organizations in Burma,”

in Robert Taylor, ed., Burma: Political Economy under Military Rule, op. cit.
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54

Transition, on the other hand, will bring a plethora of new NGOs to Burma and

they will compete with each other and with UN agencies for funding from donor

governments to implement programs. In fact, these NGOs can play a unique role in

reaching the more remote areas of the country and should be encouraged in this

direction so that international assistance is not concentrated solely in the Burman areas,

but also reaches the ethnic minorities.

UN and INGO activity in Burma over the past decade has helped the

development of small local NGOs, who often serve as implementers for their programs.

The rise of these NGOs has, in turn, encouraged a second layer of local NGOs and

community help organizations of various types that are not necessarily connected with or

financially dependent on international aid. Even before transition is underway, the

international community should consider ways to support and encourage the expansion

of this trend. This could be an important element in instilling a greater sense of

cooperation, tolerance, and community in the Burmese civilian population. It can also

help develop benevolent community activists as an alternative to the predatory USDA

and other GONGOs.

Many international assistance programs in South Africa during the final years of

apartheid, including that of the US, emphasized the development of local civic and nongovernmental groups in the black townships in order to foster future leaders for a

democratic South Africa. Many of those who came to the fore, either as politicians or

senior civil servants, in the transitional South African government after 1994 got their

start in local NGOs and civic groups nurtured by foreign donors.

7.4 Donor Governments

Very few donor governments are active at present in Burma. Chief among these

are the EU and a few individual European governments, such as the UK and France.

Japan is probably the single largest donor for grant aid, with particular emphasis on

infrastructure, such as schools, clinics, and bridges. China, of course, finances large

infrastructure projects through loans, but does not provide much, if any, grant

assistance. (Perhaps some of China’s loans could be considered a form of grant

assistance, since the SPDC rarely repays such debt.)
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55

When transition comes, each donor government will undoubtedly wish to pursue

ODA in Burma according to the proclivities of its own aid agency and national interests.

Some, such as Japan, will prefer infrastructure projects, while the US and European

governments will favor democratization, health, education, and other programs with

political and social value. Many donor governments may also favor investment in

ASEAN programs that could help with Burma’s development and integration into the

regional economy. Although there is some assistance of this kind now, it is limited by

donor government hesitation to support programs that might benefit the SPDC.

Donor governments will also be well positioned to help Burmese military train and

restructure to adjust to a security role more appropriate for democratic government. This

will be one of the most critical types of foreign assistance and should not be the domain

of a single donor government, but can be undertaken by many, including Asian

neighbors.

7.5 Exile Resources

After so many years of harsh conditions in Burma, the Burmese diaspora has

become rather extensive. Some left during the Ne Win years; many more left after 1988

because of political persecution. The former group of Burmese expatriates tends to be

engaged in professional pursuits in Western countries. The latter group includes a large

number of political activists, who have remained focused on overthrowing the military

regime and bringing about transition to democracy in Burma. With the assistance and

encouragement of US and European foundations and governments, some of these

activists have also formed specialized groups that study various aspects of Burma’s

institutional structures, articulating and planning the necessary reforms. For example,

some look at economic reforms, some at legal reforms, and others at free press and

political debate.

When the opportunity for serious transition presents itself, these groups will be

extremely helpful, not only as sources of ideas and advice for Burmese, but also as

bridges between foreign donors and local Burmese institutions and society. Among

them, they have amassed considerable experience with democracy in practice and a
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56

large body of information on the institutions of democracy worldwide.36 It will be

important for the international community to assist in engaging them systematically and

productively in transition activities.

Among the Burmese expatriates who came out earlier and settled into

professions abroad, there will also be many who wish to assist in the country’s transition

to democracy. Some are already engaged to a limited extent in some business

endeavors in Burma and are able to come and go regularly. This may be another

resource for foreign assistance to transition when the time comes.

8. Adjusting International Assistance and Policy to

Different Scenarios

The major objective of foreign assistance policies for Burma must be to build the

foundations of sustainable democracy through both political and economic reforms that

help the Burmese build effective state institutions. To this end, the basic set of political

and economic reforms required in Burma and the international assistance necessary to

support them, as described earlier, will be the same no matter what form transition may

take. However, decisions about when and how to provide this assistance, as discussed

earlier, will be critically affected by the pace and nature of the transition. The

opportunities for both reform and assistance will be very different under the conditions of

a slow, hesitant transition than they would be in a rapid transition scenario, such as we

saw with the collapse of the Soviet Union.

Transition scenario one, in which the military remains firmly entrenched, will offer

few opportunities for serious international assistance so long as there is no willingness to

undertake macroeconomic reform or to allow the population to begin participating

actively in political activity. The level of international assistance currently underway in

Burma may be the best that can be achieved. Moreover, if the degree of restriction and

interference in aid programs intensifies further, it may become difficult even to maintain

 36 The Open Society’s Burma Project has inspired and funded the creation of a website in English,

Burmese, and several ethnic languages, guiding the reader to sources of information relevant to transition in

Burma, compiled by Burmese expatriates and others. Its URL is www.burmaguide.net.
This is a working draft. Comments, questions, and permission to cite should be directed to the author.

57

current aid levels. On the other hand, there might be some possibility of working

increasingly with local NGOs and civil society organizations through indirect means, but

this would have to be done carefully to avoid negative countermeasures by the military

or USDA. Nevertheless, it might be useful, even under this scenario, to explore the full

range of political and economic reforms required in Burma and determine whether there

might be some opportunities for introducing educational programs or supporting local

education initiatives that might help strengthen civilian institutions.

On the other hand, the development of scenario two, which might come with the

transition to new military leadership, should alert the international community not only to

seek new opportunities to encourage and support political reform, but also to begin

thinking seriously about how to encourage economic reform through dialogue with new

military, civilian, political, and business leaders. In the case of government officials,

such dialogue might be initiated by ASEAN, India, or China in the context of their

cooperative relationships with the Burmese. In the case of political and business

leaders, representatives from Western countries and Japan could take the lead. Donors

should also try to expand assistance to health and educational institutions, attempting to

press civilian ministries to allow more access for international assistance programs,

including in outlying ethnic minority areas. The devastated areas along the Thai border

should get urgent attention. Special programs should be devised to support the

development of civil society institutions, including community structures and business

organizations.

In scenario three the international community would undoubtedly attempt to

respond in the first instance with an outpouring of disaster relief. The SPDC, for its part,

would undoubtedly try to limit and control this relief, giving Asian neighbors and friends

priority access. A large international relief effort, even if predominantly Asian, would

quickly strain Burma’s infrastructure and government resources, creating openings for

non-governmental activity in support of relief efforts. Under such circumstances,

international donors should try to support non-governmental groups and harness them to

their aid delivery efforts at the local level. Donors should also seek opportunities in the

aftermath of disaster relief to encourage reform and change with senior government

officials. A major disaster could also have the effect of destabilizing the military

leadership, creating the conditions for scenarios two or four to develop.
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58

The emergence of scenario four should cause particular concern among Burma’s

neighbors, especially Thailand, China, and India, who would be likely to experience spillover from widespread unrest in Burma. These governments should therefore be

prepared to act as quickly as possible, preferably in coordination, to encourage major

economic and political reform to begin immediately. If the IFIs were able to assist with

economic restructuring, with the clear support of Burma’s neighbors, it could give people

hope that major change was coming. It might also encourage serious work on political

reform, beginning with constitutional negotiations that included all major players. The

international community should not, however, anticipate a smooth transition under such

conditions. The pace at which political change could be achieved would depend on the

presence of leadership, the will to compromise, and strong outside support for a

negotiated outcome. At the same time, outside forces should refrain from attempting to

affect the course of the negotiations, unless they are specifically invited to become

involved. The complex constitutional negotiation that took place in South Africa in 1993-

94, which has already been well documented, provides an excellent example of how to

strike a balance between the dynamic of intense multi-party negotiations and the

activities of well-meaning outside observers. In any case, the initiation of economic and

political reform would be only the first step on a very long journey to stable democracy.

Scenario five would not be a situation amenable to international economic,

humanitarian, or political assistance. The most important international actors would be

Burma’s neighbors, because of their proximity to the conflict. And the most immediate

objective would be, through mediation, to stem the violence and prevent a harsh military

backlash. Although Western governments, Japan, and the United Nations were able to

play a moderating and mediating role quite effectively in Cambodia when the

Vietnamese withdrew, regional dynamics are quite different today. It is not clear that

Western or UN intervention would carry the weight in Burma that it did in Cambodia. On

the other hand, Western intervention might be welcome if there were concern among

Burmese about the intentions of their immediate neighbors (as there has been

historically during periods of instability and uncertainty). It might also be advisable to

consider offering a large international assistance package, as has been done in

Cambodia, East Timor, and other countries experiencing instability in the midst of rapid

political transition.
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59

9. Conclusions and Policy Implications

All in all, it is difficult not to conclude that the chances for peaceful transition to

stable, sustainable democracy in Burma are very slim in the near future, largely because

the conditions required for sustainability are absent and there is no opening at present to

foster these conditions. First, the intractability of the economic situation and the

regime’s refusal to entertain reforms that would begin to deal with the severe

macroeconomic distortions act as a serious inhibition to political development in the

broadest sense of the term. Second, existing government institutions are incapable of

functioning effectively to maintain central administration of the country without

authoritarian control. And finally, the impoverished educational system with its severe

limits on political and social science, as well as onerous restrictions on civil society and

public organizations, make it very difficult for the population to develop the civic

institutions necessary to support democratic government.

Since 1945, most Asian countries -- notable exceptions being Burma, North

Korea, and perhaps Laos -- have experienced significant, sometimes dramatic,

economic and political advancement under a great variety of seemingly adverse

conditions, such as foreign occupation, communism, insurgency, and partition. In all

these countries the governments, even under communist and/or autocratic rule, have

placed a premium on economic development, education, and building civilian

communities to advance their societies. Why does the military regime in Burma not

ascribe to the same values as its Asian friends and neighbors? We may never be able

to answer this question fully, but the fierce desire of successive Burmese governments

to prevent and expunge perceived foreign influence on Burmese society and culture has

undoubtedly played a large part, along with the obsession of military regimes with

maintaining comprehensive control over the population and severe restrictions on civilian

activity in the name of security and internal stability. As the world around them moves

forward in step with the global community, it will inevitably become impossible for future

Burmese leadership to continue insulating their society from the rapid pace of economic

and political modernization in Asia and starving their population for information.

Technological development is already overtaking them.
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60

The most advantageous outcome for Burma would be for its future leaders to

have the foresight and understanding to initiate a wide-ranging, rational, and phased

transition back to pluralistic democracy – a process in which the kind of political and

economic reform and social transformation necessary for stability could be undertaken

with adequate international support and assistance. Unfortunately, this appears to be

the least likely scenario from the present vantage point. All signs seem to point instead

to the probability of a hesitant, confused, and troubled period of transition in which it is

difficult to take comprehensive measures to lay the basis for economic and political

development.

The foregoing sections of this paper have outlined in general the range of major

reforms and change that will be required to stimulate economic development, to 

reconstitute and build civil society and civilian institutions, and to lay the foundations of

stable, competent governance. The tasks are massive and will take more than a

generation, but they cannot be tackled in earnest until the country’s leadership

recognizes realistically the need for transition to civilian government. Thus it is important

for the international community, particularly Burma’s Asian neighbors, to understand the

depth of Burma’s economic, social, and political dislocations and the measures that will

be necessary to correct them. If a relatively consistent and coordinated message about

the need for basic reform in political, economic and educational structures could be

delivered to the country’s leadership over time, it would be much more difficult for the

leadership to dismiss or ignore it, and some degree of enlightenment might eventually

emerge. Just as sanctions regimes can work against our ability to help, it is also

irresponsible of Burma’s friends and neighbors to conduct their relations with Burma

totally in pursuit of their own interests and without regard for the Burma’s political future.

We all share this responsibility.

9.1 China and India

China and, to a lesser degree, India have become the greatest facilitators for the

SPDC, providing financial resources and military assistance in return for access to

Burma’s natural resources. They are now engaged in avid competition for Burma’s large

off-shore natural gas reserves in the Bay of Bengal, promising billions of dollars of

revenue to the government in years to come. While it is quite natural that the world’s

two most populous and rapidly developing countries, who straddle a small neighbor
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61

relatively rich in natural resources, should see their relations with Burma in strategic

terms, it is not wise for them to disregard the country’s future welfare and stability. The

kind of economic investment, loans, and assistance they are providing Burma today do

not contribute much to the country’s economic development. So long as the SPDC’s

monetary and fiscal structures do not provide the business sector with a stable,

predictable return on investment and the government with a regular stream of public

revenue, Chinese and Indian investments are most likely to be diverted to the generals

and their families or to be used to finance hard-currency imports at the expense of

domestic economic development.

Both India and China should be giving the SPDC a strong message about the

importance of restructuring the economy to expand the business sector and they should

be managing their own economic relations with Burma to reinforce this message. Even

with much less leverage over the SPDC, Japan – through patience and persistence –

was able to make considerable progress with the Burmese government in outlining a

program for phased macro-economic reform. Although the senior leadership appears to

have taken no interest in this program since the purge of Khin Nyunt, the institutional

memory is still there and there are those at levels just below the top generals who

understand the benefits of reform, although they may not know exactly where to begin.

India and China should be participating actively in this effort.

They should also be sending a clear message on the need for political transition.

It is particularly unseemly for India, the world’s largest democracy, to be reticent about

promoting democracy in Burma. It is perhaps an encouraging sign that China’s

Ambassador to the UN, even though he vetoed the proposed UNSC resolution urging

democratic transition in Burma, regretted that he had to do so, because “it was clear

Myanmar was not moving quickly enough to promote stability. He urged the military

regime to move toward ‘inclusive democracy’ and ‘speed up the process of dialogue and

reform.’”

37 He also suggested that the SPDC should consider “constructive

recommendations” from ASEAN and “listen to the call of its own people.”

38 China’s

 37 Associated Press, “China, Russia Cast Veto Against U.S. Resolution on Myanmar,” January 14, 2007.

38 Financial Times, US edition, “US Wants China to Push for Reforms in Burma,” February 12, 2007.
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62

public stance is undoubtedly indicative of messages that are being sent through

diplomatic and other channels.

9.2 ASEAN

Since accepting Burma into its midst against the advice of the United States and

Europe, ASEAN has suffered a heavy political cost in its relations with these two large

partners. Having anticipated that membership in ASEAN would give Burma the

confidence and support to develop economically and politically, ASEAN governments

have been dismayed by the sheer intransigence of the SPDC. In recent years, the rise

of parliamentary consultative groups within ASEAN has translated into strong pressure

on ASEAN governments by elected officials to speak out against the SPDC’s harsh

repression of Burma’s democratic forces and its refusal to move forward seriously with

its own plan for political transition. ASEAN’s political frustrations are further compounded

by the SPDC’s role in fostering a hostile investment climate that has produced

substantial losses for Southeast Asian investors.

Although some ASEAN voices have raised the question of expelling Burma from

the organization, this is probably not a practical course, because it would eliminate an

important channel of communication and coordination with the seriously xenophobic

Burmese leadership. ASEAN has a multitude of economic structures and regional

programs, which provide a variety of measures ASEAN might take to encourage

economic reform and transition in Burma. Perhaps it would be useful for ASEAN and its

partners, particularly the US, EU, Japan, and China, to explore the possibility of

developing a strategy for integrating Burma more firmly into ASEAN economic

structures.

It is also vitally important for ASEAN to remain a source of political pressure on

Burma. The SPDC and its successors will continue to value membership in ASEAN as a

collective means of dealing with China and other large countries, and therefore will have

to pay some heed to ASEAN’s concerns about how Burma’s actions affect the welfare of

the collective organization. Fortunately, we can expect the ASEAN parliamentary

consultative group to demand that the organization hold the SPDC accountable for its

failure to live up to its commitments.
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63

9.3 The United Nations

As a long-standing member and the fatherland of former UN Secretary General U

Thant, Burma places the United Nations at the center of its diplomacy. During the years

that General Khin Nyunt managed Burma’s diplomatic relations, UN activity in Burma

expanded substantially. UN agencies were allowed to set up missions in the country

and establish programs for various forms of welfare and humanitarian assistance, after

having been expelled and excluded by Ne Win. From time to time, the Secretary

General’s representative was received to facilitate communication between the SPDC

and political opposition groups. The UN Human Rights Rapporteur was allowed, off and

on, to visit the country and report extensively on humanitarian conditions. Annual

meetings of the UN General Assembly have traditionally served as a forum to chronicle

and inveigh against the SPDC’s record of repression and failure to move forward with

political transition. Calculating that the SPDC was particularly sensitive about its image

in the UN, Burmese exile groups and their supporters have placed great hope in the UN

as a means of forcing change, particularly when the Security Council agreed in 2006 to

put Burma on its agenda. With the veto of a UNSC resolution on Burma by China and

Russia and the SPDC’s reduced responsiveness to the UN since Khin Nyunt’s purge,

the UN’s role as an engine for change in Burma appears substantially less promising.

As a practical matter, the UN cannot become a central force in bringing about

change in Burma, unless the Burmese government seeks and accepts its assistance.

Short of this, it can only be a forum for debate, as it has been in the past, and a vehicle

for the international community to exert rhetorical pressure on the generals. If and when

genuine transition begins in Burma, the UN may become a more important source of

advice and support, not only through its assistance agencies, but also through the ability

of the Secretary General to facilitate mediation of internal disputes. Because of

historical Burmese respect for UN neutrality, the UN might ultimately be the most

acceptable external interlocutor for all sides in an internal dispute, if mediation is sought.

9.4 The United States

Under the current circumstances, U.S. policy is focused appropriately on

pressuring the SPDC to return Burma to civilian democratic government. The fact that

Burma is considered to be of little to no strategic interest to the United States, especially
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64

when compared to the many more urgent concerns the U.S. faces abroad, has allowed

the development of multiple layers of U.S. sanctions inhibiting relations with Burma as a

means of pressure on the SPDC. There are, for example, laws prohibiting U.S.

investment in Burma and Burmese exports to the U.S. There is an executive order

denying Burma the use of U.S. financial services, making it impossible for the dollar to

be traded legally in Burma. (The dollar is still the basis for a large portion of black

market activity.) Senior Burmese military and government officials and their family

members are not allowed to visit the United States. The U.S. Congress will not approve

the posting of an Ambassador to Burma, but maintains diplomatic relations in all other

respects, with the Chief of Mission carrying the title Charge d’Affaires. The Congress

allows very little of the annual foreign assistance earmark for Burma to be used inside

the country and then only through international NGOs. Aside from EU prohibitions on

visits by senior Burmese military and government officials, the U.S. sanctions against

Burma are not reinforced at the international level, with one major exception: As

governors of the major international banks, the U.S. and its partners have managed to

prohibit the World Bank, IMF, and Asian Development Bank from undertaking any

significant programs in Burma. Since various U.S. attempts to seek broader

international sanctions through the UN, the EU, and ASEAN have not succeeded over

the years, it now appears that most U.S. sanctions against Burma are destined to remain

largely bilateral.

With the possibility of some degree of generational evolution in Burma’s military

leadership growing increasingly likely, this might be an opportune moment for U.S.

policymakers to undertake a fundamental review of the assumptions underlying the

policy that has been in place for nearly two decades and reevaluate it in the context of

today’s international environment and evolving U.S. interests. Among other things, such

a review should encompass a number of fundamental issues. First is the question of

U.S. strategic interests in the Southeast Asia region, particularly in light of the rapid

economic development in China and India that will inevitably affect power balances in

the region, as well as the way those two countries deal with regional partners. Does the

United States perhaps have a greater strategic interest in Burma than has commonly

been assumed? Second is the notion that total isolation is the most appropriate

response to repressive and seemingly defiant autocratic regimes. Has this produced

positive results in Burma? Finally, policymakers should take a hard look at how we have
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65

been interacting with regional and international partners in seeking to maximize pressure

on Burma’s military regime. While such a review might conclude that current U.S. policy

toward Burma remains well founded and most appropriate to the current situation, it

would at least have the beneficial effect of drawing attention to the gradual subterranean

changes that are always underway in any situation, no matter how glacial it appears on

the surface. It would also focus attention on what modifications and adjustments in U.S.

policy would be effective and appropriate in response to changes in Burma, and it might

shed light on new international strategies for bringing pressure to bear more effectively

on the SPDC.

It is inconceivable that the United States would not want to play a central and

constructive role in supporting transition in Burma, once it begins. Yet some of the

constraints built into current U.S. policy will make it difficult for the U.S. to contribute

quickly and constructively to potentially positive developments in Burma, let alone to

facilitate gradual changes in Burma that would encourage transition and build the

foundations for stable democracy. For example, strict prohibitions on private business

activity and on economic assistance, both bilaterally and through IFIs, may serve to

assure that the U.S. is not contributing to the financial gain of the SPDC. However, they

also have the effect of prohibiting some kinds of economic activity that could encourage

economic reform and the development of Burma’s free market sector, if carefully

targeted. The United States should therefore consider positioning itself better to play a

leading role in facilitating the development of democratic institutions during a process of

staged transition, which is the course that Burma is most likely to take before returning to

full democracy.

Finally, the U.S. sanctions regime and its confrontational style with Burma’s

military leadership, no matter how well justified, have relegated the United States to a

backseat position in the effort to persuade the SPDC to proceed with transition. It is

simply a fact of life that Burma’s Asian neighbors will remain its key interlocutors and

points of contact until the appropriate time comes for the United States to ease its

sanctions and adjust its demeanor. Therefore, the U.S. should consider whether it might

be more productive to work in partnership with Burma’s neighbors to ease the generals

into reform and transition, rather than simply exhorting their governments to copy U.S.

policy. This would only require a change in style and not in the fundamentals of U.S.
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66

policy toward Burma, and might help to uncover new possibilities for encouraging the

process of change inside Burma.

For example, during this period when transition is still prospective, the United

States might consider spearheading a wide-ranging effort to develop coordinated

international plans to offer Burma assistance with economic and political development at

specified points in the future. The OECD principles for assistance to fragile states

(appended to this study) represent a comprehensive starting point and roadmap for such

an effort. Burma and its specific conditions would provide the ideal case study for

testing the viability of these principles. This kind of effort might even make it possible to

involve Burmese experts in articulating some of the tasks and proposed assistance

programs.

Whatever policy adjustments the United States might decide to make in the

future, however, U.S. policy must remain firmly fixed on the objective of achieving

democratic government in Burma and therefore on unfailing support for the country’s

democratic forces, especially the embattled National League for Democracy and its

General Secretary Aung San Suu Kyi, Under Aung San Suu Kyi’s guidance, the NLD

has kept the promise of democracy alive for 17 years, braving the threats and

intimidation of the military regime at great personal sacrifice. It is a testament to the

NLD’s durability that, after a 17-year struggle for survival, it is still the beacon for other

democracy forces in the country. When the time comes for real transition, Burma will

need a steady point of reference to articulate and demarcate the route to democracy.

Although it will certainly be a healthy sign if many new democratic voices emerge, it will

be a long time before any of them can attain the national stature and democratic vision

of the NLD and Aung San Suu Kyi.
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67

Appendix 1. Principles For Good International

Engagement in Fragile States

OECD Development Co-Operation Directorate

DCD(2005)8/REV2

April 7, 2005

PREAMBLE

A durable exit from poverty and insecurity for the world’s most fragile states will

need to be driven by their own leadership and people. International actors can affect

outcomes in fragile states in both positive and negative ways. International engagement

will not by itself put an end to state fragility, but the adoption of the following shared

principles can help maximize the positive impact of engagement and minimise

unintentional harm.

The long-term vision for international engagement in fragile states is to help

national reformers to build legitimate, effective and resilient state institutions.

Realisation of this objective requires taking account of and acting according to the

following principles:

1. Take context as the starting point. All fragile states require sustained

international engagement, but analysis and action must be calibrated to particular

country circumstances. It is particularly important to recognize different constraints of

capacity and political will and the different needs of: (i) countries recovering from

conflict, political crisis or poor governance; (ii) those facing declining governance

environments, and; (iii) those where the state has partially or wholly collapsed. Sound

political analysis is needed to adapt international responses to country context, above

and beyond quantitative indicators of conflict, governance or institutional strength.

2. Move from reaction to prevention. Action today can reduce the risk of future

outbreaks of conflict and other types of crises, and contribute to long-term global

development and security. A shift from reaction to prevention should include sharing risk

analyses; acting rapidly where risk is high; looking beyond quick-fix solutions to address
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68

the root causes of state fragility; strengthening the capacity of regional organizations to

prevent and resolve conflicts; and helping fragile states themselves to establish resilient

institutions which can withstand political and economic pressures.

3. Focus on state-building as the central objective. States are fragile when

governments and state structures lack capacity – or in some cases, political will - to

deliver public safety and security, good governance and poverty reduction to their

citizens. The long-term vision for international engagement in these situations must

focus on supporting viable sovereign states. State-building rests on three pillars: the

capacity of state structures to perform core functions; their legitimacy and accountability;

and ability to provide an enabling environment for strong economic performance to

generate incomes, employment and domestic revenues. Demand for good governance

from civil society is a vital component of a healthy state. State-building in the most

fragile countries is about depth, not breadth – international engagement should maintain

a tight focus on improving governance and capacity in the most basic security, justice,

economic and service delivery functions.

4. Align with local priorities and/or systems. Where governments demonstrate

political will to foster their countries’ development but lack capacity, international actors

should fully align assistance behind government strategies. Where alignment behind

government-led strategies is not possible due to particularly weak governance,

international actors should nevertheless consult with a range of national stakeholders in

the partner country, and seek opportunities for partial alignment at the sectoral or

regional level. Another approach is to use ‘shadow alignment’ – which helps to build the

base for fuller government ownership and alignment in the future - by ensuring that

donor programs comply as far as possible with government procedures and systems.

This can be done for example by providing information in appropriate budget years and

classifications, or by operating within existing administrative boundaries.

5. Recognise the political-security-development nexus. The political, security,

economic and social spheres are interdependent: failure in one risks failure in all others.

International actors should move to support national reformers in developing unified

planning frameworks for political, security, humanitarian, economic and development

activities at a country level. The use of simple integrated planning tools in fragile states,
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69

such as the transitional results matrix, can help set and monitor realistic priorities and

improve the coherence of international support across the political, security, economic,

development and humanitarian arenas.

6. Promote coherence between donor government agencies. Close links on the

ground between the political, security, economic and social spheres also require policy

coherence within the administration of each international actor. What is necessary is a

whole of government approach, involving those responsible for security, political and

economic affairs, as well as those responsible for development aid and humanitarian

assistance. Recipient governments too need to ensure coherence between different

government ministries in the priorities they convey to the international community.

7. Agree on practical coordination mechanisms between international actors. This

can happen even in the absence of strong government leadership. In these fragile

contexts, it is important to work together on upstream analysis; joint assessments;

shared strategies; coordination of political engagement; multi-donor trust funds; and

practical initiatives such as the establishment of joint donor offices and common

reporting and financial requirements. Wherever possible, international actors should

work jointly with national reformers in government and civil society to develop a shared

analysis of challenges and priorities.

8. Do no harm. International actors should especially seek to avoid activities which

undermine national institution-building, such as bypassing national budget processes 1

or setting high salaries for local staff which undermine recruitment and retention in

national institutions. Donors should work out cost norms for local staff remuneration in

consultation with government and other national stakeholders.

9. Mix and sequence aid instruments to fit the context. Fragile states require a mix

of aid instruments, including, in particular for countries in promising but high risk

transitions, support to recurrent financing. Instruments to provide long-term support to

health, education and other basic services are needed in countries facing stalled or

deteriorating governance – but careful consideration must be given to how service

delivery channels are designed to avoid long-term dependence on parallel,

unsustainable structures while at the same time providing sufficient scaling up to meet
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70

urgent basic and humanitarian needs. A vibrant civil society is important for healthy

government and may also play a critical transitional role in providing services,

particularly when the government lacks will and/or capacity.

10. Act fast... Assistance to fragile states needs to be capable of flexibility at short

notice to take advantage of windows of opportunity and respond to changing conditions

on the ground.

11. ...but stay engaged long enough to give success a chance. Given low capacity

and the extent of the challenges facing fragile states, investments in development,

diplomatic and security engagement may need to be of longer-duration than in other lowincome countries: capacity development in core institutions will normally require an

engagement of at least ten years. Since volatility of engagement (not only aid volumes,

but also diplomatic engagement and field presence) is potentially destabilizing for fragile

states, international actors commit to improving aid predictability in these countries, by

developing a system of mutual consultation and coordination prior to a significant

reduction in programming.

12. Avoid pockets of exclusion. International engagement in fragile states needs to

address the problems of “aid orphans” - states where there are no significant political

barriers to engagement but few donors are now engaged and aid volumes are low. To

avoid an unintentional exclusionary effect of moves by many donors to be more selective

in the partner countries for their aid programs, coordination on field presence and aid

flows, and mechanisms to finance promising developments in these countries are

essential.

i The piloting of the Principles will draw on the experience of the Good Humanitarian

Donorship Principles endorsed in Stockholm (June 2003).

ii For governments where political will exists and capacity is the main constraint,

supporting state-building means direct support for government plans, budgets, decisionmaking processes and implementing structures. In countries where political will is the

main constraint, support for long-term state-building does not necessarily imply shortterm support for government - but it does mean moving beyond repeated waves of
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71

humanitarian responses to a focus on how to support and strengthen viable national

institutions which will be resilient in the longer-term. A vibrant civil society is also

important for healthy government and may play a critical transitional role in providing

services, particularly when government lacks will and/or capacity.

iii The Addis Ababa principle developed in November 2001 as part of the Strategic

Partnership for Africa Initiative states: “All donor assistance should be delivered through

government systems unless there are compelling reasons to the contrary; where this is

not possible, any alternative mechanisms or safeguards must be time-limited and

develop and build, rather than undermine or bypass, governmental systems."
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72

ABOUT THE AUTHOR

Priscilla Clapp is a retired Minister-Counselor in the U.S. Foreign Service. She is

currently involved in community and academic work with several institutions.

During her 30-year career with the U.S. Government, Ms. Clapp served as Chief

of Mission at the US Embassy in Burma (1999-2002), Deputy Chief of Mission in the US

Embassy in South Africa (1993-96), Principal Deputy Assistant Secretary of State for

Refugee Programs (1989-1993), Political Counselor in the US Embassy in Moscow

(1986-88), and chief of political-military affairs in the US Embassy in Japan (1981-85).

She also worked on the State Department's Policy Planning Staff, in its East Asian,

Political Military, and International Organizations Bureaus, and with the US Arms Control

and Disarmament Agency. She speaks Russian, Japanese, French, and some

Burmese.

Prior to government service, Ms. Clapp spent ten years in foreign policy and

arms control research, under contract to the MIT Center for International Studies and as

a research associate at the Brookings Institution. She is a member of the Council on

Foreign Relations and the International Institute for Strategic Studies. Her books

include: with Morton Halperin, Bureaucratic Politics and Foreign Policy (Brookings,

2006), with I.M.Destler et al., Managing an Alliance: the Politics of U.S.-Japanese

Relations (Brookings, 1976), with Morton Halperin, U.S.-Japanese Relations in the

1970's (Harvard, 1974). She is the author of numerous chapters, articles and other

publications on foreign policy.

ABOUT THE UNITED STATES INSTITUTE OF PEACE

The United States Institute of Peace is an independent nonpartisan institution established and

funded by Congress. Its goals are to help prevent and resolve violent conflicts, promote postconflict stability and development, and increase peacebuilding capacity and tools. The Institute

does this by empowering others with knowledge, skills, and resources, as well as by directly

engaging in conflict management efforts around the globe.