Burma Rebooted: Part 2 — Reformists dare to push back against Beijing

Editor's note: "Burma Rebooted" is a three-part series that looks at the startling reversal of Burma's repression and isolation. Though known for the world's longest running civil war and thousands of political prisoners, Burma is now also a place where pop singers can show a little skin, new cars will soon be seen around town and pushing back against China is suddenly a possibility.

RANGOON, Burma — For centuries, Burma was an impenetrable badlands rife with malaria, headhunters and, according to 13th-century explorer Marco Polo, the occasional unicorn.

These days, we can subtract the unicorn (which was probably just a rhino) and swap headhunters for ethnic militias defending their hills against Burma’s brutal military. The nation is still among the world’s most isolated, and doubly so thanks to Western sanctions.

But Burma, officially known as Myanmar, finally appears destined for the spotlight. It is rich in natural gas, bigger than France and wedged between China and India, Asia’s twin rising powers.

If only it weren’t run aground by despots over the last 50 years.

More: Burma or Myanmar? Does it matter?

Since 1997, the United States, the European Union and others have outlawed most business dealings with the pariah state. Their goal: forcing better behavior from a government guilty of locking up dissidents and waging ruthless war on ethnic minorities.

But none of these misdeeds have scared off China, which has swooped in to shower Burma’s rulers with pay-offs, military hardware and mega-projects. For 2010-2011, official data shows 70 percent of Burma’s $20 billion in foreign investments coming from China.

Lacking friends in the West, Burma has allowed China to become its powerful protector. But this has forced a new dilemma stirring anxiety among autocrats and pro-democracy forces alike.

Should Burma protect itself from China?

More from Burma Rebooted: Part 1 — Times are changing in Burma

“In every far away place, there are quite a lot of Chinese projects. They employ not with labor from here … but with Chinese people coming in,” said Tin Oo, vice-chairman of democracy icon Aung San Suu Kyi’s National League for Democracy party.

“All these places will be infested with Chinese people,” Tin Oo said. “Burma will not be an independent state. Burma will become the vassal of the People’s Republic of China.”

“All these places will be infested with Chinese people,” said Tin Oo, growing visibly agitated during an interview at his Rangoon party headquarters. His party, banned by the government, is known for resisting the Burmese government's tyranny. But he speaks of Chinese dominance as a a threat to the nation itself.

“Burma will not be an independent state," Tin Oo said. "Burma will become the vassal of the People’s Republic of China.”

Beijing's bi-coastal ambition

For nearly 15 years, Western diplomats have watched with frustration as Chinese cash subverted their Burma sanctions. Still, the two nations’ cozying up cannot be interpreted as a romance.

In addition to greed, Burma’s rulers have also been driven into China’s arms by necessity and fear, said Thant Myint-U, an American-born Burmese scholar and former Cambridge University lecturer.

“It may sound ludicrous to some,” Thant Myint-U said. “But coming at the same time as tightening sanctions, covert funding of opposition groups and the invasions of Iraq and Afghanistan, a US-backed overthrow didn’t sound too ludicrous to the generals in charge.”

Among Burmese generals’ greatest fears is a United Nations “commission of inquiry” into war crimes that could land them in prison. China has so far sheltered the generals from this fate with its UN influence.

More from Burma Rebooted: Part 3 — Young, gifted and Burmese

Beijing’s compensation? Advancing its “Two Oceans” policy.

Unlike America, blessed with dual coasts, China fronts only the Pacific. To its southwest lies the Indian Ocean through which 80 percent of its crude oil and other essential commodities are shipped. The dilemma: China’s nearest western coastline belongs to Burma.

At present, ships approaching from the west must ply the narrow Straits of Malacca near Malaysia and push ahead to Chinese shores. Not only does this route waste time and fuel, it’s vulnerable: a rival navy such as America’s could easily choke off the channel and grind China’s economy to a halt.

China’s solution is to transform Burma into its own California, a long western coastline built up with ports and pipelines. Just as Egypt’s Suez Canal created a maritime highway between Europe and Asia, China could alter the map in an equally radical fashion, said Thant Myint-U, whose book “Where China Meets India” explores both powers’ potential to remake Burma.

This transformation is already underway.

Video: Burma's gag rule

Of China’s $14 billion in pledged investments to Burma in 2010-2011, most are designed to feed China’s soaring energy demands. A planned port project in Kyaukpyu, western Burma, will take shipped-in foreign oil and shoot it up a 600-mile pipeline into China’s interior.

Yet another pipeline will pump Burma’s natural gas into land-locked Southwest China. New Chinese-built highways will further link the two nations and a series of hydro-power dams will zap electricity to China via long cables.

Neighboring India, a democracy itself, also has designs on Burma. Under its “Look East” policy, India plans to build ports, roads and rail links to its far-flung northeastern provinces. But its promised projects, for now, lag far behind China’s.

Land of the lost

Burma shook off Britain’s colonial yoke in 1948. In the decades before, few would have imagined it could become one of Asia’s poorest nations.

From 1936-39, Burma was Southeast Asia’s wealthiest country with the per capita value of exports six times greater than that of India and 25 times that of China, according to the University of Singapore.

It was also the world’s biggest exporter of rice, a crop eaten by half the world’s people.

“Burma, prior to the second World War, used to export 4 million tons. Today they export 100,000 tons,” said Vichai Sriprasert, CEO of exporter Riceland International in Thailand, which has since become the world’s largest rice exporter.

“They did it in 1945. They showed the world they were No. 1,” Vichai said. “They could come back to being No. 1 again.”

Burma is not Afghanistan, barren and rubbly, or Somalia, cursed with drought. That the nation is so fertile and rich in gems, gas and timber makes its poverty all the more regrettable.

What it shares with those two countries, however, is unbridled corruption. In its index of the world’s most corrupt nations, Transparency International gives Somalia the top spot with Burma and Afghanistan sharing second place.

However, in November of 2010, Burma technically ended decades of dictatorship. An election, clearly rigged, shifted power to a civilian party flush with ex-generals and cronies.

Whether the new regime will ever allow real democracy, or continue as a dictatorship lite, remains to be seen. But new economic reforms, paired with a slow rollback of repressive laws, appear partially motivated by fears of Chinese supremacy.

As it stands, most Western investments in Burma are banned. So are loans from the World Bank and the International Monetary Fund, the major life-support lenders to destitute nations.

As China fills this investment void, there are signs that Burma’s rulers are open to the reforms that could bring in Western funds to balance out China’s influence.

Exhibit A: Burma’s new president, an ex-general named Thein Sein, recently suspended construction of a $3.6 billion Chinese hydro-power dam. It would have flooded an area equal in size to New York’s five boroughs.

The mega-project would have displaced tens of thousands and offered little benefit to poor villagers. There were rare public protests against the dam, and it was condemned by Aung San Suu Kyi, a long-time government foe considered a voice of the oppressed.

As China’s state-run Global Times warned, this “whimsical change will inevitably send troubling signals to potential investors.” But Burma’s president insisted in a speech that the dam ran “against the will of the people.”

Acknowledging the people’s will is rare for a Burmese ruler. In doing so, Thein Sein appears to be positioning himself as the public face of Burma’s reform movement.

“It seems like his internal power struggle [with old-guard hardliners] has been resolved for the time being,” said Jim Della-Giacoma of the International Crisis Group, which has closely monitored Burma’s reforms. “They’re acutely aware that they’ve been left behind compared to their peers in the region.”

According to a Burmese journalist based in Rangoon, the president hopes to go down in history as the man who pulled his country out of the darkness. “We all think Thein Sein is trying to show us he’s the good guy,” he said. “All the top generals have $3 million houses and 10 cars. But he appears to live a simpler life.”

Thein Sein seeks to proclaim Burma’s rise by chairing ASEAN, the Association of Southeast Asian Nations, a 10-country bloc that includes Thailand and Vietnam. Burma’s next shot at the rotating chairmanship is in 2014. ASEAN will make the decision in coming weeks and, according to Della-Giacoma, Burma may well get its wish.

“The message other members have given is that you’ll have to allow hundreds of journalists in the country,” he said. “They will want to speak to Aung San Suu Kyi. And after a certain amount of time, that will become ordinary and we’ll forget what an extraordinary thing it used to be.”

Arm them all

As in many Southeast Asian nations, including those run by communists, Burma’s fear of Chinese power runs deep.

Many of Burma’s contemporary generals rose through the ranks fighting the China-supplied Communist Party of Burma, which controlled a vast stretch of hills through much of 20th-century’s latter half.

Even today, Burma’s most powerful armed ethnic group, the Wa, is led by ethnic Chinese who control an estimated 30,000 fighters. Rich from manufacturing most of Southeast Asia’s meth pills, the Wa maintain anti-aircraft weaponry and close ties to Chinese officials across the border.

Ironically, China has long financed Burma’s ethnic militias as well as the army battalions deployed to kill them. Between 2000 and 2008, Burma’s military soaked up more than 60 percent of China’s arms sales to Southeast Asia, according to the Stockholm International Peace Research Institute. That’s roughly $164 million in assault rifles, armored vehicles and warships.

China’s interests in Burma are starkly pragmatic. It seeks stability with militants on the border, which is longer than the continental US Pacific coastline. And it wants freedom to extract timber and gems from rebel-held territories. It also seeks goodwill with generals in charge of approving billion-dollar investments that will feed its energy needs.

With few revenue sources to turn to, Burma’s rulers have been forced to tolerate China’s interference in the hills. But the idea that Burma’s reform drive is solely designed to back off China and end Western sanctions is “completely off base,” Thant Myint-U said.

Burma’s ruling class appears to enjoy Chinese money just fine. But they would prefer to make China compete more with investors from India, Russia, rising Asian economies and the off-limits West.

“That the old system was unsustainable was plain to see,” Thant Myint-U said. “It’s hardly surprising that some at the top understood the need for real reform.”

An uncertain future

Burma’s rulers have a long way to go in satisfying the West.

The White House takes its cues from Aung San Suu Kyi, a Nobel laureate whose 1990 election to the prime minister’s seat was voided by the military. Considered Burma’s rightful leader, she has helped dictate the West’s demands: release all political prisoners, end authoritarian laws and offer the people a greater say in Burma’s future.

Would these reforms kickstart a Burma renaissance? The end of US sanctions could bring Starbucks and KFC franchises to Burma’s decaying cities. It could give British Petroleum and Exxon Mobil a shot at its gas reserves. But there is still no guarantee that a freer Burma would bring great prosperity to the masses.

“There could be more media freedom, much more greater economic growth, perhaps even another round of elections that are freer and fairer,” Thant Myint-U said.

“But at the same time, there could be more corruption, cronyism, criminality,” he added. “We could see the end of dictatorship but also a return to the sort of gangster politics we had back in the 1950s, with the army hovering in the background.”

In other words, Thant Myint-U said, “Burma could become a lot like many other countries in the region.”