One Year into the Lose-Lose Putsch (3): Friends Like These?

One Year into the Lose-Lose Putsch (3): Friends Like These?

This is the third instalment in a four-part series remembering the first year of the cataclysmic military coup in Burma.

The first instalment, “2021: The Golden Age of the Burmese Military”, can be found here.

The second, “Who Rules Burma?”, is here.

Min Aung Hlaing dreams of electric buses

Although both vital and novel, none of the developments mentioned in Part II currently have much bearing on the balance of force within Burma as the failed coup drags into its second year. The military, by its nature, retains significant spending power due to its de facto access to the offshore accounts of its legions of hangers-on, to oil and gas, and to Burma’s illicit export trade in gems, teak, and narcotics.

Such funds are easily washed through friendly banks, or simply stashed in vast mansions; as an old quote commonly attributed to the (newly sanctioned) son of (newly re-sanctioned) magnate and arms dealer U Tay Za goes: “we are still f**king cool in Singapore!” In Feb. 2022, as the junta’s economic race to the bottom continues, and as an increasingly alienated Naypyidaw continues to fail to comply with international demands, it is certainly not absurd to ask how long this old maxim can hold. 

Three particularly interesting stories of economic rebellion hit the headlines over the year. Launched shortly after the NUG’s announcement of D-Day, a quite remarkable guerrilla campaign against military telecom Mytel led to the destruction of over 800 of the joint venture’s towers and base stations. Next, a comprehensive national boycott of military-made products led to the failure of the once ubiquitous and highly lucrative Myanmar Brewery; the military’s Myanma Economic Holdings (MEHL) is now fighting its venture partner, Japan’s Kirin, all the way to the courts of arbitration, further eroding any trust the conglomerate commands (not that any remains). Finally, two of the military’s most important partners — energy giants Total and Chevron — recently announced that they were to ditch the Myanma Oil and Gas Enterprise (MOGE), a long-time partner in the development and operation of the offshore Yadana gas field. All of the above outcomes would have been considered preposterous during previous uprisings.

In staging the coup, the military has — as it is prone to do every few generations — exposed the army for what it is: an opportunistic cancer for business. The World Bank’s Economic Monitor recently reported that it expects Burma’s now “critically weak” economy to grow by just 1% in the year to September, suggesting that it is now 30% smaller than it would have been without the February coup and COVID-19 third wave (in July, the same institution had predicted a contraction of  18%). 

As the junta systematically destabilizes the country’s business environment, firms are still reporting sharp reductions in both sales and profits, compounded by a lack of access to banking and internet services (the military imposed ludicrously low withdrawal limits on ATMs early in the coup, creating a two-tier system between those with contacts at banks — read: military associates — and those without). Farms have been hit by a sharp rise in the cost of inputs, reduced access to credit, and logistical issues flowing from endemic conflict, adding to what the World Bank sees as serious pressures on food security. The closure of schools, high levels of unemployment, and mass displacement are likely to lead to long run economic damage (no threat to the military business nexus whose success — driven by rent-seeking, slavery and simple raw material extraction — is entirely disconnected from efficiency gains, skill levels, and human capital in general). The World Bank has noted that the manufacturing sector is an outlier and factory output, employment, and exports appear to be stabilizing, yet only yesterday Burma’s largest workers groups called for a renewed boycott of production in light of deteriorating work conditions since the coup (DVB reported on the conflicting post-coup experiences of those working within Burma’s factories in October).

Although much must still be done with regards to cutting the flow of capital to the junta and its cronies, major western powers have, over the year, rolled out various rounds of sanctions against the leaders of the SAC, the military’s two conglomerates, and a number of other associations and associates. New sanctions (on MOGE and others) are, from the EU at least, expected before the end of February. The junta’s actions in other spheres — most crucially in its attack on internet access and data security (this month the military is expected to enforce a total ban on VPN usage, and codify its snooping on telecom user data) — have forced a raft of other business out the back door, including Norwegian telecom Telenor which is expected to finally exit the country after the military orchestrated a much maligned sale to a crony group with links to Mytel. 

Despite these developments, the theory of Tayza Jr. certainly still holds water: the last round of Western sanctions, which targeted junta administrators and businesses with links to the military (such as KT Group, which, despite having undoubted historical links to the military, is, by many estimates, less culpable than scores of other crony conglomerates) suggest that democratic governments are hitting their limits with regards to those they can either identify or justify placing under an embargo. More vitally, until a decisive change in the power dynamic occurs in the current conflict, it is unlikely that Beijing, Singapore, or any other of Burma’s reluctant neighbors will go any great way to cut their financial ties to the junta. Those with serious long-run involvement in Burma’s economy — Singaporean and Thai banks, the chair of the Japan-Myanmar federation, Hideo Watanabe, Thai energy firm PTTEP, to name but a few— have again shown that, whilst the military holds its opposition to a stalemate, they have a vested interest in not rocking the boat. In addition, a number of chambers of commerce — many representing the self-interest of their members above the asserted views of respective national governments — have signaled that they will continue to look for ways to sustain ventures in the country.

Whether investors will return for new military tenders is a different question altogether, and it currently appears that only China has both the motives and capital to invest in the type of Burmese mega projects now necessary for Naypyidaw to legitimately balance the books. Knowing this, the junta recently said it was to make the Chinese RMB a legal currency for tax and payment settlements in Burma, making it only the second foreign exchange to be accepted after the US dollar (which the Central Bank of Myanmar simultaneously announced it was looking to end its reliance upon).

It is also important to note that, in sustaining the conflict, the military has once again shown it has no qualms in simply thieving what it does not have to hand — be that a paratha from a street vendor, livestock from a village, fines from those “caught without a smartphone”, the homes and businesses of civilians and opposition politicians, or motorbikes and trucks for its troops. As mentioned, inpune troops certainly have no problem in appropriating the living bodies of those used as porters and human shields; even in a state of complete autarky, the feudal Burmese army would happily march until nobody was left to prey on.

Will you be my godbrother?

For almost six decades China has been treated with the utmost suspicion by the generals. Now, with an economic meltdown of its own making and the withdrawal of significant investment flows from multinational corporations and listed firms, it has become imperative that the junta work with big-spending (and some would claim, bigger taking) Beijing to balance its budget. Going further, if Min Aung Hlaing is to achieve his much mooted (and wholly loopy) post-coup plans for subway systems and electric vehicles, he would likely need to become a full-blown vassal of the Middle Kingdom. 

But, in public at least, China still appears far from endorsing the junta. The country has a well-established rapport with Aung San Suu Kyi and the NLD, largely as the party became the first of Burma’s rulers to approve China’s big-ticket strategic infrastructure (Belt and Road Initiative) projects, for which Beijing emphasises the importance of upholding stability, regardless of morality. For both of these reasons, China has this year continued to play all sides to the conflict, even going so far as to urge the junta not to outlaw the NLD last August. At the same time, however, it has played a prominent role in blocking resolutions on Burma at the UN Security Council, shielding the junta from the gallows (although its representatives did not support the appointment of a junta-backed envoy to the UN when credentials were debated in September). China also recently provided millions in funding to junta-backed border forces and their commanders, plus arms, jet fuel, and other military tech, including a Ming-class diesel-electric submarine.

As mentioned above, China has proven vocal when its business interests are attacked, the most recent incidence of this coming on Jan. 7 when resistance groups destroyed the power supply to the hugely controversial Tagaung Taung nickel plant on the Mandalay-Sagaing border. Rather importantly, the bombing appears to have catalysed the first public interaction between China and the NUG, after the Chinese Embassy in Yangon sent a letter urging Burma’s “resistance movement” not to “harm Chinese investments.” In response, the NUG’s defense minister, Yee Mon, reportedly assured the diplomat that similar attacks would not occur, whilst reiterating the call for countries not to engage in business with the junta. Such oscillation only goes to show that China is, as always, grasping to engage with all groups with skin in the fight (despite many resistance groups maintaining weak, if any, command links to the NUG). 

The military, in turn, has taken to mining vast swathes of Chinese pipeline, a myopic strategy also recently employed to protect its own Mytel towers. It does so because, in the complete absence of legitimacy, that is all it can do. Nobody believes that this blind use of crude force will prove to be a sustainable strategy for ruling a country, or for protecting the interests of foreign investors.

This fact alone means that, for as long as the resistance is buoyant, the military is, after the coup, in a weaker position with regards to both standing up to China and in banking its astronomical BRI funds. The once shrewd nationalists of the Tatmadaw have boxed themselves into a corner — how proud Min Aung Hlaing’s predecessor would be of his panhandling!

Pathetically, China is perhaps the most benevolent of all the autocratic nations that the junta can now feasibly claim as a friend. But, as diplomats in both the US and China consciously attempt to stop Burma from becoming the latest potential theater of proxy-war, Yangon and Naypyidaw’s hotels and Ngapali’s beach resorts now resound to the noise of glasses being clinked between Burmese and Russian naval men. In a June visit to Moscow (one of the only foreign cities that has welcomed Min Aung Hlaing since the coup), Russian Defense Minister, Sergei Shoigu, spoke of “deepening military ties” with the junta. Rumors quickly spread that Moscow’s Military Maritime Fleet was courting the junta for a port in the Bay of Bengal. In September, the SAC’s second-in-command, Soe Win, paid a return trip, allegedly to sign US$2.3 billion worth of military contracts, including the purchase of an air defense system. Although seemingly unwilling to personally meet with Min Aung Hlaing since the coup, Vladimir Putin has proved more than willing to both dress the junta chief as a learned goblin-wizard and abet the military’s atrocities by acting as key broker of military tech. Just last week, a Russian vessel was pictured unloading a consignment of BRDM-2M 4X4 armored vehicles, and shipping containers full of other toys-for-the-boys, at Yangon’s Thilawa port.

The next morning, reports suggested that a sanctioned Iranian vessel, the Negar, docked at the MITT Port operated by Hong Kong conglomerate Hutchison. On Jan. 13, a plane belonging to Iranian cargo airline Qeshm Fars Air landed in Burma. Both the airline and the shipping line used are said to have close links to the Tehran administration, raising fears that the junta is also buying weapons and fuel from Iran’s Revolutionary Guard. Russia, Syria, and North Korea: Min Aung Hlaing’s small yet supportive circle of friends.

The coup’s effect on the generals’ relationship with ASEAN has been by far the most remarkable. Last October, in a move unprecedented in the bloc’s history, leaders came to a (loose) consensus on banning Burma’s military heads from high-level summits; something surprising to all observers, and no doubt unanticipated by the junta itself. The decision came after almost six months of apparent inaction by ASEAN. However, after Brunei’s special envoy had finally arrived in Naypyidaw, he quickly established that Min Aung Hlaing had absolutely no intention of sticking to a “Five-Point Consensus” agreed to with bloc leaders in Jakata in April. The agreement called for the immediate cessation of violence, constructive dialogue among all parties to the crisis, mediation facilitated by an envoy of the ASEAN chair, the provision of humanitarian assistance arranged by ASEAN’s AHA Centre, and a visit by the special envoy and delegation to Myanmar to meet all parties concerned. As of Feb. 1, the junta has still failed to oblige in all areas.

Burma’s economic and social collapse has real world consequences for members of ASEAN. Remarkably, leaders from Singapore, Indonesia, Malaysia, and Brunei have managed to hold the bloc to its ban, whilst providing the concession that it send its top foreign ministry diplomat, Chan Aye, to attend summits in place of military heads. To the evident chagrin of many in the bloc, the junta has gone so far as to decline this olive branch, leaving Burma’s seat empty at ASEAN’s last three high-level meets.

To remedy this, ASEAN’s latest chair, Hun Sen’s Cambodia, has tried a different tact: direct engagement with the military. However, this approach already appears to be backfiring: Hun Sen has so far been left with egg on his face following a visit to Naypyidaw in which an increasingly needy Min Aung Hlaing both requested Hun Sen be his “godbrother” and promised that he would extend the junta’s long mooted fantasy ceasefire. Despite Phnom Penh’s Peace Palace churning out much questionable PR from the visit, the junta has tangibly and undeniably intensified airstrikes since the promise was made, causing reputational damage that Hun Sen, it appears, is already looking to minimise. The military has also doubled down on its commitment to ban envoys from visiting elected representative of the CRPH and NUG (whom it now terms a “terrorist organization”), instead promoting people it terms “NLD leaders” — typically retired, cowered, or senile former NLD politicians — to international diplomats (the NLD CEC itself claims that the junta has detained or imprisoned three quarters of its leadership to date).

The Cambodian envoy has therefore quickly backtracked on inviting foreign minister Wunna Maung Lwin to an upcoming ASEAN Retreat — cancelled once already following what many presume was a diplomatic boycott by bloc members wishing to uphold the junta’s ban. Cambodia, seen by many as the junta’s last hope, is once again quickly falling back in line with the rest of ASEAN. Although neighboring autocrats — such as Prayuth’s Thailand — risk much by alienating the military, the instability caused by the coup, the human catastrophe sending tens of thousands across Burma’s borders, and the pariah status being cultivated by Naypyidaw mean that there has rarely been a harder time for them to commit to cosying up to the generals.

All in all, both the junta’s post-coup economic ineptitude and diplomatic petulance are leaving it with very little room to manoeuvre on the international stage: the UN’s indefinite deferral of a decision on Burma’s representation at the General Assembly, leaving pro-democracy diplomat, Kyaw Moe Tun, as ambassador, being another case in point. At the same time, historic economic links and the military’s continued preeminence in the violent use of force will mean that many nations will continue to hedge their bets and work with all sides to the conflict, no doubt leading to unabating human misery and economic and social decline within Burma. 

However, there has never been a time where the capitulation of the junta, now with very little to offer the world, would be so uncritically accepted by the entire international community. Min Aung Hlaing — despite in many ways attempting to mould Burma in the image of, for example, autocratic Beijing or Thailand’s coup leaders — has all but proven to the world that, unlike other regimes, he has no viable plan to establish internal credibility or long-term economic and geo-political stability. Crucially, as we reach this unprecedented new juncture, the rest of the world is beginning to factor a serious new contender into its realpolitik: the NUG and the resistance movement.