A Perspective on China Myanmar Economic Corridor and Internal Dynamics

Daw Aung San Suu Kyi, as a mark of support for China’s Belt and Road Initiative (BRI) had attended both the first and second BRI Forums held in May 2017 and April 2019 in Beijing. Undoubtedly, there were political and economic ramifications of this move despite the fact that Myanmar remains wary of projects under the BRI. It was in November 2017 that an announcement of China Myanmar Economic Corridor (CMEC) was made by China’s Foreign Minister Wang Yi. However, the details of the draft Memorandum of Understanding between the two sides did not come out till four months later in February 2018.

The CEMC involves linking of Yunnan through Mandalay to Yangon and Kyakphyu (on Arakan coast) through a high speed railway and new road network as also establishment of new industrial zones. It also needs to be noted that the previous government of President Thein Sein had cancelled a three year old railway project on the same route in 2014 because of objections from the people. Therefore, for time being only a feasibility study of the proposed rail line is being undertaken. The other important projects under CMEC are development of Kyaukphyu sea port and Special Export Zone. There are many other projects associated with it under the overarching umbrella of BRI. For instance, it also includes an urban development project for a new city next to Yangon. Out of three dozen projects or so under the CMEC, the Myanmar government has approved nine projects and development of the border economic cooperation zones in Kachin and Shan states.

Reportedly, the talks between the two sides lacked transparency as hardly any details of projects and what transpired during the discussions was revealed to media. Evidently, the negotiations for the MOU took place after the mass exodus of Rohingya in August and September 2017 which resulted in the criticism of Myanmar army and government by the international community especially, the US and the Western countries. With the prospects of developmental aid and investments from the US and the West dwindling down Myanmar rulers were hard put to resist Chinese offer of projects under the rubric of BRI. Myanmar negotiators were also not in a position to bargain hard on terms and conditions of these projects. However, in August 2018, due to debt trap concerns Myanmar scaled down the Kyaukphyu port project from 7.3 billion USD to just about 1.3 billion USD. According to the economic adviser to Aung San Suu Kyi, the revised cost of around US $1.3 billion is something that’s much more plausible for Myanmar’s requirements. In fact, along with the development of the port a Special Economic Zone worth another 2.3 billion USD would have taken the total cost to 10 billion USD.

Myanmar leadership has been at pains to clarify that the government had scrutinized the CMEC MOU very carefully and had also inserted its own terms and conditions in the MOU. Such terms include opening up the tenders to non-Chinese companies, freedom to acquire international financing and ensuring that the projects are mutually beneficial. Only time will tell as to how far these terms and conditions would be adhered to by China. Further, China’s Ambassador to Myanmar had gone out of his way to get the suspended Myitsone hydro-power project revived. The project suspended by the previous government of Thein Sein in 2011 due to multiple objections by the local Kachin population has witnessed renewed efforts by China to compel the Myanmar authorities to go ahead with the environmentally dubious project. That was also the time when Myanmar leadership was in a position to resist China’s influence as Myanmar was opening up to the West and the US.

The strategic environment has undergone a rapid change since then. The Chinese ambassador to Myanmar Mr. Hong Liang (who has now been replaced by Mr. Chen Hai in June), speaking from a position of influence, had been issuing dire warnings to local Kachin leaders to support the Myitsone dam project. Such coercive tactics reflect China’s insensitivities to the requirements of the local population and its own misplaced sense of entitlement. It is precisely such behavior by China that imposes caution on the countries in going ahead with BRI projects. However, the new Ambassador, Mr. Chen Hai has promised to promote mutual trust and deepen ‘practical cooperation’ on the CMEC. It is also being said that China’s President Xi Jinping has not paid a visit to Myanmar so far because as a Vice President, he had overseen the signing of memoranda agreement for the Myitsone dam project and viewed abrogation/suspension of the agreement as some sort of a personal affront. However, this can also be seen as exerting indirect pressure on Myanmar to come to terms with China’s stance. While Aung San Suu Kyi has attempted to explain the benefits of the hydro-electric dam to the local population, the popular resentment to the project has been very strong.

Though the presence of Ethnic Armed Organizations (EAOs) and insurgent groups, almost all along the entire length of CMEC should pose security challenges yet, China has been able to secure its interests and create leverages with all the players in the ongoing process of peace and reconciliation. On the one hand China has been arming the United Wa State Army (UWSA) which leads the Federal Peace Negotiation Committee/Northern Alliance¹, on the other hand, China has been acting as a mediator between the EAOs and the Myanmar government to facilitate the peace process. These EAOs have not signed the Nationwide Ceasefire Agreement (NCA) with Myanmar government, therefore, remain largely out of the peace process.

Myanmar security forces have been carrying out operations against Kachin Independent Army (KIA) and most recently against the Arakan Army (AA) which has been trained by KIA. AA has been causing considerable damage in Arakan and Paletwa region of Chin State adjacent to Arakan State. Chinese weapons find their way to the all such EAOs through UWSA. As a show of force UWSA celebrated their 30th anniversary with a grand parade in April displaying heavy artillery, drones as also a Chinese helicopter. Needless to say that China has been playing from both sides of the game for long to achieve its own strategic and economic objectives in Myanmar.
Both Tatmadaw and Myanmar civilian leadership believe that China’s equation with the EAO’s can be helpful in bringing them to the negotiating table even while they remain concerned with China’s complicity in equipping UWSA/EAOs with arms and defence equipment. Aung San Suu Kyi also believes that China’s obsession with BRI can be better utilized to push the EAOs and Myanmar military towards reaching a degree of compromise by diluting their respective rigid stands on political and security questions bedeviling the peace negotiations. Tatmadaw, on its part, sees itself as a guardian of Myanmar’s national security, somewhat like what Pakistan Army imagines itself as a guarantor of Pakistan’s national security. Additionally, Myanmar armed forces also remain dependent upon China for provision of arms and defence systems especially so, when the prospects of engaging the western countries in this respect have become problematic. At another level, Aung San Suu Kyi is hoping to reduce military’s dominant influence on the power structures in Myanmar.

Aung San Suu Kyi had accepted China’s offer of help before 21st Century Panglong Union Peace Conference in August 2016 and thereafter, pushed by China, UWSA attended the first session of the conference in August 2016 and later on seven non-signatories EAOs were brought to the table by China for second and third sessions of the conference held in May 2017 and July 2018 respectively. Yet, there is a widespread perception that China has not put adequate pressure on the EAOs to come to a modus vivendi with Myanmar government. Meanwhile, some of the EAOs feel that China gives its own strategic ambitions priority over ethnic people’s requirements and objectives. Many analysts in Myanmar also believe that China’s approach to peace process is driven more by its desire to speedily implement the BRI projects rather than working towards long term peace and stability in the conflict-ridden areas of Myanmar.

It is a different matter that to realize its objectives especially those related to BRI, China has flouted it’s much cherished principle of non-interference in other countries internal affairs. China has done so not only in the case of Myanmar but also in Sri Lanka, Nepal and elsewhere where Beijing has supported political parties and elements that advance its BRI related interests and objectives. Increasingly dominant position of China in Myanmar’s peace process has also sidelined efforts of the UN, US and western countries like Norway which had been involved in the process in some way or the other.

From Indian perspective, the construction of CMEC and development of port facilities at Kyaukphyu while solving China’s Malacca dilemma also provides China opportunities to convert it into naval base like what it has sought to do in Gwadar in Pakistan and Hambantota in Sri Lanka. India has been engaging Myanmar military as also the civil government especially for supporting Myanmar’s peace process. Coordinated operations along India-Myanmar border areas have resulted in Myanmar military capturing many India focused insurgents. However, some of these anti-India insurgent groups have moved to Sino-Myanmar border areas closer to Ruili. Such groups could recommence their anti-India activities depending upon changes in the strategic environment.

Further, India has initiated a number of connectivity projects in Myanmar and beyond as part of multiple regional and sub-regional connectivity initiatives. Needless to say that these need to be completed without much delay. Though a mention of cooperating on Bangladesh-China-India-Myanmar Economic Corridor was made by President Xi Jinping during bilateral meeting with Prime Minister Modi on the sidelines of the SCO Summit at Bishkek in June yet, India is not very enthusiastic for such a corridor because of a variety of contextual reasons.

Finally, India needs to enlarge its engagement with Myanmar both economically and in security fields. While Myanmar leaders might not have been invited for PM Modi’s investiture ceremony it is time that such oversight is remedied soonest by high level reciprocal visits with an eye on obtaining substantive results.

Reference:

1. Federal Peace Negotiation Committee (FPNCC)/Northern Alliance comprises of United Wa State Army, Kachin Independence Army (KIA), Arakan Army (AA), Myanmar National Democratic Alliance Army (MNDAA), Ta’ang National Liberation Army (TNLA), National Democratic Alliance Army (NDAA) and Shan State Army- North. At times FPNCC and Northern Alliance are used interchangeably.