Myanmar’s military coup risks plunging millions into poverty
Written by Dr Ronan Lee, Visiting Scholar at Queen Mary, University of London’s International State Crime Initiative and author of ‘Myanmar’s Rohingya Genocide’
March 18, 2021
Millions of Myanmar’s residents have taken to the streets demanding the military stand down after the coup on 1 February. Anti-coup protests have been remarkably diverse. Protesters have come from every walk of life, ethnic group, and religion. Protests have been held in hundreds of urban centres, from cities like the commercial capital Yangon to remote mountain hamlets. Residents of Inle Lake’s floating villages protested from boats, and some protests were joined by trains of elephants and their mahouts.
Anti-coup protesters are demanding the return of their democratic rights. But rather than a return to the pre-coup status quo where the military retained significant political influence alongside quasi-democratic structures (25 per cent of the seats in parliament and government ministries were reserved for military appointees) many protesters want a more mature democracy built on federal structures with greater opportunities for ethnic minority group participation and without any military political influence. Myanmar’s residents fear for their safety if the military stay in control, but many will also hold grave fears for what military domination likely means for the country’s economy.
Myanmar’s natural resources, climate and its people’s industry contributed to a country that was the world’s leading rice exporter prior to the Second World War. While the war seriously damaged the country’s infrastructure, the country’s post-war military rulers never built more than a perilously weak economy. Myanmar’s military were appallingly poor economic managers during their five decades of rule following their 1962 coup. The military exploited the country’s natural resources and its people to enrich the military leadership, their families and a coterie of cronies who became fabulously rich at the expense of ordinary people.
An economic program known as the ‘Burmese Way to Socialism’ guided the military’s policies between 1962 and 1988. It was claimed to mix socialism with Buddhist values, but involved widespread nationalisations of businesses, Soviet-style central planning, isolationism, and placing the military at the centre of the economy. As an economic policy, it was an abject failure. Military dictator Ne Win’s economic mismanagement became as well-known as his dedication to numerology, highlighted by his decision to demonetarise the national currency, the Kyat, and reissue notes in denominations of 45 and 90 to be divisible by his lucky, number, nine. This decision impoverished many and contributed to widespread protests against military rule in 1988 that were violently supressed by soldiers using similarly brutal tactics to those seen in recent weeks in Myanmar.
In the aftermath of the 1988 uprising, the military recalibrated its economic approach, embracing policies centred on crony-capitalism and the corrupt extraction of natural resources. Generals, their families and business associates, and military companies amassed vast wealth and paid little tax while Myanmar’s economy continued to be among the world’s weakest with poverty widespread and spending on education and health among the world’s lowest. Global Witness highlighted one element of Myanmar’s broken economy by describing how jade extraction has long made military figures, their families and cronies rich while avoiding taxes. In 2014 they reported that jade extraction was worth US$31 billion a year, equivalent to 48% of Myanmar’s official GDP.
With the military exploiting the economy on a grand scale for an extended period, it was little wonder that by 2010 when the military did allow some movement towards at least procedural democracy, Yangon’s streets bore a closer resemblance to early 1960s Bangkok or Kuala Lumpur than those of a modern Asian city. The poverty rate in rural Myanmar reached shocking levels. Asian Development Bank research showed how only 65 per cent of rural residents could access safe drinking water and 34 per cent could access electricity.
The military released Aung San Suu Kyi from house arrest in 2010 and allowed her election to Myanmar’s parliament in 2012 which contributed to Western optimism that the military had finally settled on a path that would lead permanently away from military involvement in politics. With some fanfare that included country visits by political leaders including President Barack Obama (twice) and Prime Minister David Cameron, most economic sanctions were lifted, and Myanmar regained access to Western markets. Unlike the targeted sanctions on military business interests proposed in response to the current coup, previous sanction regimes tended to be broader in scope and while they certainly hurt the military, they hurt ordinary people too. Their removal, once the military retreated from overt involvement in politics, quickly contributed to an improved economic outlook. Helpful too was the removal of many military-era regulations and restrictions, and the opening of Myanmar to the internet. Ironically, many of these liberalisations were undertaken by a military proxy government administration led by an ex-general.
Myanmar remains far from a rich country and the benefits of economic improvements have not been evenly shared, but there were clearly improvements for many when the military stepped away from direct political control. The World Bank estimated poverty levels had dropped to 32.1 percent by 2015, down from 42.4 per cent in 2009/10 and upgraded Myanmar from low-income country to a lower-middle income country in its annual rankings. Immediately prior to the Covid-19 pandemic, the World Bank forecasted Myanmar’s GDP growth for 2019/2020 to reach 6.4 per cent. The pandemic saw this revised downwards to just 0.5 per cent but with an expectation the Myanmar economy would quickly bounce back to achieve growth of 7.2 per cent in 2020/21, but that was before the military launched the February coup.
Protecting the business interests of coup leader Min Aung Hlaing and his family was widely reported as a key motivation for the military’s undertaking of Myanmar’s February coup. This strongly indicates Myanmar’s current military bosses are little different from the exploitative military of the past. Personal economic gain rather than concern for the welfare of Myanmar and its people is a key priority for Myanmar’s military leadership.
Since the coup, there has been significant foreign capital flight with multinationals withdrawing from Myanmar fearing investment risks because of the domestic instability created by the coup and the reputational damage that being seen to endorse military-rule would bring. The coup has also generated domestic political turmoil, bringing millions of protesters to the streets to defend their democratic aspirations, but there are compelling reasons to believe their economic aspirations are also seriously threatened by the return of Myanmar’s military to political power. This is one more reason why the international community should strongly and urgently support the aspirations of Myanmar’s people for a democratic and peaceful future.
Contact: @Ronan_Lee and firstname.lastname@example.org