India should use Burma trade as barter

Burmese General Than Shwe’s recent visit to India has sparked harsh reactions. Many have berated the world’s largest democracy for openly conniving with an oppressive regime. His visit to India came just before elections are expected to be held in Burma later this year.

It is interesting to note the paradigm shift in relations between the two neighbours since the 1990 Burmese elections. Two decades ago, the Janata Dal-led coalition government in India firmly denounced the usurping of power by the junta following the bloody uprising of 1988. The Indian government offered asylum to many Burmese refugees and activists during the protests, openly criticising the military regime.

As the junta prepares for another election this year, Indo-Burmese relations seem at an all-time high. A lot has transpired since Aung San Suu Kyi’s National League for Democracy (NLD) won the elections, yet was denied power, in 1990. One of the key factors influencing cordial relations between India and Burma is trade. Some political analysts believe that economics and politics are closely intertwined, and in this light, India sees Burma as a strong foothold to enter Southeast Asia and thus finds it difficult to ignore it. Add to this the growing clout of China in the region, and you get an insecure India trying to catch up on regional supremacy.

According to the joint statement issued by the Indian Ministry of External Affairs after Than Shwe’s visit, India has agreed to four more major investments in Burma – US$60 million for construction and renovation of the Rhi-Tiddim road, a US$10 million grant for acquiring agricultural machinery, a US$64 million credit in the transmission lines sector and another US$6 million credit for developing a microwave line between the two countries.

Reports surfaced earlier this year that foreign investment in Burma had dropped to US$315 million in 2010 from US$985 million the previous year. In this context, India’s investment in the region holds huge significance. Trade relations between India and Burma alone are expected to be worth US$1 billion by the end of this year. Moreover, India has already become Burma’s third biggest foreign investor, after China and Thailand.

What India gets in return hasn’t been proportional over the years. In 2008-09, Burma’s exports to India were nearly five times more than its imports. With investment in the Kaladan multi-modal project, a truck manufacturing plant by Tata Motors and the massive hydropower project backed by the National Hydro Power Company (NHPC), the balance sheet tips considerably in favour of Burma.

India could use this monetary deficit to influence Burma’s internal politics. Given its long-standing pro-democratic stance in world politics and heavily growing economic involvement in Burma, a demand for free and fair elections from the regime seems within India’s capacity. China, the only other significant force in the region, doesn’t project itself as a particularly pro-democratic figure and seems unlikely to take a stand in the matter. This adds onus on India’s part, making it the only possible player that could significantly affect the course of events.

What India also cannot ignore is maintaining its relations with the West. India faces pressure from the US which demands a strong stand on its behalf over democracy in Burma. With the West keeping a keen eye over India’s foreign policy in this matter, India could gain brownie points on moral grounds from the West. However, what remains to be seen is whether India possesses a moral fibre at all.

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