New openness gives Myanmar rare clout

As Myanmar improves ties with the US, China fears a threat to its strategic partnership

As Chinese workers in hard hats and red overalls bulldoze deep trenches into the orange soil across northern Myanmar for gas and oil pipelines to China, China’s largest energy conglomerate is paying cash for land and trees in the pipelines’ path, and building schools and health clinics for some of the poorest people on earth.

The compensation offered by China National Petroleum Corp. reflects a bitter lesson China learned about doing business in the new, more democratic Myanmar when construction on a major Chinese hydroelectric dam there was suspended last year after a groundswell of outrage erupted over what was seen as China’s imperious attitude toward Myanmar’s people and its environment.

The gentler approach also reflects hard calculations in an escalating battle with the United States for regional influence. As Myanmar loosens the grip of decades of military dictatorship and improves ties with the US, China fears a threat to a strategic partnership that offers access to the Indian Ocean and a long-sought shortcut for oil deliveries from the West Asia.

With the US reasserting itself in Asia, and an emboldened China projecting military and economic power as never before, each side is doing whatever it can to gain the favour of economically struggling, strategically placed Myanmar. The Obama administration would like a swift foreign policy success in an election year. Having another country move from dictatorship toward democracy on president Barack Obama’s watch would be a political achievement; having a friendly country on China’s border would be a strategic one.

But the US is handicapped in delivering meaningful assistance by economic sanctions that Congress is reluctant to lift. Myanmar must conduct fair parliamentary elections, settle conflicts with ethnic minorities and release more political prisoners before more than two decades of harsh sanctions can be removed, administration officials say.

China, Myanmar’s chief patron for decades, wants to maintain a relationship that will allow unfettered access to Myanmar’s energy resources. But the Chinese, accustomed to unwavering loyalty from Myanmar at the United Nations and other diplomatic forums, are faced with a new government led by president Thein Sein that has shown signs of wanting to be less dependent on its old friend and more responsive to the concerns of its citizens.

In perhaps the most visible symbol of Myanmar’s new openness to the west, secretary of state Hillary Rodham Clinton visited in December, the first secretary of state to do so in more than 50 years. Photographs of her shaking hands with the revered opposition leader, Aung San Suu Kyi, women of similar age in white jackets, their hair drawn back in ponytails, radiant smiles on their faces, now hang in cafes and homes, an impossibility six months ago.

Clinton tempered her visit with warnings that economic sanctions would not be lifted as fast as Myanmar would like. Even so, the US restored full diplomatic relations, a reward for Myanmar’s political and economic changes so far. In a counterpunch, Chinese officials blamed US meddling for the suspension of the $3.6 billion dam project in September, and said the US diplomatic effort was a direct challenge in its backyard.

Broad-based opposition

A prominent Chinese historian, Qin Hui of Tsinghua University in Beijing, warned his government that blaming the west’s meddling for the dam rebuff missed the point. The people of Myanmar had expressed “exceedingly broad-based opposition” to building a dam at the headwaters of the Irrawaddy River, the nation’s biggest waterway, he wrote. China still enjoys a strong position in Myanmar.
The two authoritarian governments have known how to do business in closed-door deals on arms sales and megaprojects that critics say are laced with corruption. While Myanmar was isolated by international sanctions, China was its main foreign investor, and it has the advantage of proximity over a long border.

Beijing has plowed billions of dollars into the country, and the United States cannot compete with that, US officials say. One businessman, who declined to be quoted by name because free speech can still be an uncertain proposition in Myanmar, said that if the US insisted on maintaining sanctions and the economy failed to take off, China would come to the rescue with the old-style cronyism of big loans and huge infrastructure projects. The new gas pipeline alone, scheduled to open next year, will bring billions of dollars in royalties and transit fees. The oil pipeline to be completed after that will also offer sizable revenue.

For that reason, Washington needs to take a more pragmatic approach, said Aung Naing Oo, the Burmese deputy director of the Vahu Development Institute, a Thailand-based organisation set up by refugees from Myanmar, also known as Burma. “They should do more than talking,” he said of the Obama administration. “By continuing the sanctions, the US is inadvertently helping those who want to take us back to the old ways.”

For now, China feels burned by Myanmar on the dam project. The dam had provoked an outpouring of nationwide opposition, backed by Suu Kyi, and brought into the open a nascent antipathy to China, as well as to the ethnic Chinese population. The dam on the Irrawaddy River, which has near mythic significance in Burmese culture, was being built by one of China’s biggest state-run power companies, China Power Investment.

About 90 per cent of the dam’s power was destined for Yunnan province in China although, according to the World Bank, less than 20 per cent of households in Myanmar have electricity. Thousands of villagers were forcibly resettled by the military. They were given some compensation, including 21-inch television sets.

Opposition to the dam remains strong near the site at Myitsone. Some residents of the nearby village of Tanghpre tried to return home this month from a relocation camp. At the red-brick Roman Catholic Church of the Columbine Mission, Sister Lydia sobbed as she told how the police had detained her when she helped some of her congregation return.

On March 17, Sister Lydia lost her battle. The villagers she had assisted were bundled up by the military and taken back to their Chinese-built homes in the relocation camp. A sign planted in Tanghpre said: government property. In a sign that the company has not given up, Lu Qizhou, the head of China Power Investment, said at a news conference in Beijing this month that mistakes had been made and that the company would try to take better care of the local population. Whether the Myanmar government succumbs to Chinese displeasure and allows the dam construction to resume remains unclear.

Meanwhile, the pipeline project – which starts at a deep-sea port on the Bay of Bengal and is being built by China National Petroleum, operator of projects in nearly a dozen countries – proceeds at an urgent pace. Trucks laden with pipes trundle through villages around the clock. Bulldozers dig trenches 12 hours a day. The company is making relatively generous payments to cash-starved farmers to move off the rich soil that grew luxuriant crops of watermelons, castor beans and mangoes.

“They built a pipeline near here for their own economy,” said Daw Swe Oo, a math teacher. “They take a lot of our resources and donate back a little here and there. But I am just happy and excited to have a nice new school to teach in.”