Growth at any cost: Strategic direction or tunnel vision?

Growth at any cost: Strategic direction or tunnel vision?

A lot has changed in Burma since the country’s transition began in 2011. This remains an indisputable – albeit somewhat overplayed – fact. Keen to participate in the country’s uneven process of opening up, uncomfortable compromises have had to be made on all sides – something which seemed unthinkable only a few years ago. In the realm of macro-level policies shaping the future of Burma, though, the power players dominate. There is a marked asymmetry between the traction given to voices propounding a tried-and-tested model of ‘development’, and those pushing for a more heedful and cautious approach. Despite the coverage afforded to Burma in recent years, few people seem to be asking either why this is, or what the consequences might be.

For more than 50 years, the world largely looked away as torture, ethnic cleansing and acute poverty stalked Burma. Compulsion to leave the bloody past behind by engaging with Burma’s oligarchs is, perhaps, understandable in the world of realpolitik. Alongside this, though, account must be taken of the coterie of actors keen to pursue a model of development that prescribes quick fixes to economic and social problems, ensuring the demand for their expertise and safeguarding their role in Burma’s future at a stroke. Slow and steady no longer wins the race.

Put simply, the quicker these issues can be rendered in language comprehensible to policy makers, the quicker solutions can be identified. The national census undertaken earlier this year was the clearest evidence yet of the international community’s resolve to “understand” the country – and the subsequent violence a stark reminder of the cost of subsuming wider social cleavages to it. What we do understand, though, is that Burma’s natural resource-reliant economy is pressed by the twin needs of economic diversification, and rationalisation of its regulatory environment. Far less clear is the causal relationship between a resolute focus on these economic fundamentals and dramatic improvements to social welfare. Moreover, there is a very real risk that giving primacy to rapid economic growth over social welfare fans the flames that make the reform process so unstable.

More haste, less speed

The potential for natural resource exploitation to fuel further conflict is clear, not least in border regions where the brutalisation of civilian populations has continued unabated since President Thein Sein took office in 2011. With a number of important issues unresolved – including how the distribution of resource dividends might take place on an equitable basis – the auctioning off of some of Burma’s most valuable assets is proceeding apace. Despite Burma’s welcome application to the Extractive Industries Transparency Initiative, the ongoing reluctance of companies involved to disclose information relating to their ownership structures does not bode well for those championing accountability as attendant of foreign capital investment.

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Of course, this investment will be central to the diversification of Burma’s economy in the future – itself vital if the cadre of well-connected oligarchs are to have their virtual monopolies challenged. Without this, the provision of public services cannot be improved, and the country’s gaping income and wealth inequality cannot be bridged. Recognition of the singularity of recent Burmese experience should, then, be evident in the policies proposed to address these issues. Yet such thinking is not forthcoming. Instead, the proposed direction going forward centres on tourism and garment manufacturing.

The rise in foreign visitors to Burma in recent years has been dramatic, straining the country’s tourist infrastructure. Increasing the capacity to cater for this deluge seems like a quick win – it will create jobs, bring welcome tourist dollars into the economy, and let potential investors get to know the lay of the land. Policies capitalising on these facts are almost incontrovertible, and can be implemented rapidly. This, in part, explains the ease with which institutions, such as the World Bank and the Asian Development Bank (ADB), have been able to fund luxury hotels and urban renewal projects.

But apprehension remains that the jobs created by these programmes will be reserved for a tiny minority of well-educated Burmese, with promises exaggerated to legitimise the building of what the World Bank’s private sector investment arm, the International Finance Corporation (IFC), calls “critical business infrastructure”. Concerns have also been raised about the potential of such projects to serve the interests of oligarchs and strongmen, rather than creating opportunities for the country’s largely unskilled labour force. Yet it is the creation of these jobs that must underscore a more sustainable and equitable recalibration of Burma’s economy in the future.

President Thein Sein’s agricultural reform strategy is sharpening this need even further. In essence, the government is prioritising modernisation through market liberalisation and mass land confiscation, aimed at driving vast numbers of the population towards other forms of work. The government is keen to show that internal economic migrants will find work through the development of labour intensive industry. Neighbouring Cambodia and Bangladesh are examples of how this can create jobs, and form the backbone of an export-oriented strategy designed to engage with the global economy. They are also vivid examples of how the pursuit of rapid economic growth in a weak regulatory environment can threaten the rights, lives and livelihoods of the most vulnerable.

Scrutiny of this growth model has thus far been limited, despite the clear risks associated with genuflection to it. The possibility that Burma’s transition is nurturing an authoritarian plutocracy in the guise of a market democracy is very real. A slew of questions remain unaddressed. Should we be confident that global retailers like Gap will be at the vanguard of standard setting, given its response to last year’s Rana Plaza tragedy? What is the likelihood that companies relying on scale and volume will work with local small-and-medium enterprises to build the domestic economy, adhere to international standards in their supply chain management, and consult communities adversely affected by their investment? Consultation of recent history is not encouraging here.

Given the close association of the majority of Burma’s most influential businessmen with the military, these concerns have a strong foundation. Ongoing forced relocation of communities affected by the flagship Thilawa Special Economic Zone, and the government’s draconian response to their protests have been well documented. The administration’s backsliding on its amnesty for political prisoners,complicity in crimes against humanity in Arakan State, and crimes committed by the military all evidence the international community’s willingness to prioritise fast-tracked economic reforms, hoping improvements to social welfare will be a positive externality. This is an enormous risk. To mitigate against this, the pace of engagement with Burma’s ruling elite must be tempered, and be made conditional on road-maps that redefine and subsequently reward concrete progress over time.

Quid pro quo?

Perhaps the most pressing issue to be resolved is the country’s ongoing civil war. The difficulties standing in the way of realising a comprehensive, nation-wide peace settlement should focus the efforts of all stakeholders to making a settlement workable, not provide a basis for kicking the can down the road. Rather than finding ways to circumvent security issues, human rights abuses, and regulatory loopholes, the leverage of the international business and aid communities must be put to use here. Withholding investment from areas of ongoing conflict as long as military spending remains high and reports of human rights abuse surface, would be a good start.

[pullquote]”The pursuit of rapid economic growth in a weak regulatory environment can threaten the rights, lives and livelihoods of the most vulnerable”[/pullquote]

The experience of other governments who have faced the “resource curse” should also be drawn upon and considered independently, rather than refracted through the ideology of international financial institutions and recast to fit their prescriptions. A resource-sharing agreement between national and sub-national governments will be the cornerstone upon which Burma’s future is built. Reaching an agreement will require consultation, debate and compromise. Currently, there is little pressure on stakeholders to reach this type of agreement from investors or international governments. Without establishing such an agreement, though, the likelihood is that the spoils of Burma’s resource endowment will be appropriated by a tiny elite, and that capital investment and the provision of public services will remain impoverished.

Furthermore, evidence of an improved regulatory environment must be demonstrable. Putting in place the mechanisms for local governments to tax effectively, remain accountable for their practices, and more generally build trust between citizens and the state machinery are long-term projects. The argument that foreign investment drives up standards has its merits – at least in some sectors – and the same could be said of infrastructure projects of bodies like the ADB. But this is no substitute for the maturation of local level institutions, and the skill development of indigenous personnel to staff them. The advanced industrial economies of the world took generations to build this institutional infrastructure; can we seriously contend that this revolution will take place in Burma over the course of a few years?

Whether our focus is on institution building, economic diversification, or improving the climate of human rights, meaningful consultation with stakeholders at every level is crucial. Building bridges with Naypyidaw at the expense of civil society organisations and grassroots activists will result – indeed, is resulting – in a parochial understanding of the fundamental issues facing the country.

Governments, businesses and aid organisations retort that the immediate focus must be establishing trust at the highest levels of government to effect any change. The grain of truth in this should not obscure the fact that without actively building relationships with grassroots organisations we risk both legitimating and building a more efficient, authoritarian regime whose record speaks for itself.

In a climate in which haste trumps prudence, the responsibility to tread with care often gets muted. Up to now, the nature of international engagement with Burma has been geared towards formulating quick fixes to deeply complex issues. An absence of forethought as to how these policies will affect the welfare of Burma’s diverse peoples risks both upsetting the country’s already fractious social balance, and entrenching the role of the military as a result. How will our willingness to reward rapid economic reform while ignoring egregious human rights abuses play out? Only time will tell.

 

David Baulk holds an MSc in Development Studies from the School of Oriental and African Studies, London, and is a former researcher for Burma Campaign UK. He now works for a Burmese women’s rights organisation in Chiang Mai, Thailand.

The views expressed in this article are the author’s own and do not reflect DVB’s editorial policy.
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