Revisiting country risk for Myanmar

By Trevor Wilson

APPS Policy Forum
July 19, 2016

Can the new government deliver?

Expectations on Myanmar’s new government are sky high, but is it up to tackling the significant challenges the country faces? Trevor Wilson outlines the areas for optimism and those where pessimism prevails.

After Myanmar’s 2015 elections, the international credit rating agency, Moody’s, initially issued a very positive response to the results, describing the National League for Democracy’s (NLD’s) landslide victory as “credit positive”.

This judgment is consistent with the generally favourable response to the election outcome, which seemed to confirm the overall popularity of the NLD and its leader Aung San Suu Kyi. But is it more complicated than this? What is really known about the NLD’s likely policies and attitudes to defining and shaping the country, and what is known about their experience and likely competence in handling the complexity and pressures of governing?

After the NLD’s crushing election victory, some risk assessment agencies may be inclined to give the NLD the benefit of the doubt (although they might not necessarily admit this publicly). However, it will probably become apparent quite quickly if the NLD is not living up to the very high expectations that their victory created.

Clear-headed judgments about the NLD’s capacity to govern, and trust in effective national policies, are needed with less hyperbole about the advent of ‘democracy’ in Myanmar. How will Myanmar’s new government demonstrate that it really possesses the institutions and systems to manage the country’s major national issues over the next five years?

A reasonable question to ask is: what outcomes are expected with Myanmar’s major problems under a new government, and how will the NLD’s standing be affected in the next few years? In broad terms, the two major matters of (related) unfinished business in Myanmar are the process of national reconciliation and the consolidation of peace (in socio-economic terms as well as in political terms).

These are both issues in which the NLD and Aung San Suu Kyi in particular are keenly interested, and on which there may not be a great deal of difference between the overall approach of the previous Thein Sein government and that of an NLD government, although significant differences in style and the handling of contentious issues may emerge.

There are grounds for slight optimism, in terms of reconciliation, between the NLD and the Army. The current Commander in Chief, Senior General Min Aung Hlaing, certainly seems disposed to seek reconciliation with Suu Kyi, although it remains to be seen whether an enduring arrangement between them can be consummated. Ongoing relations between the military and the NLD are likely to call for deft and delicate management of the various issues, possibly leading to some natural wavering in the relationship at times. What might happen to this relationship when Aung San Suu Kyi departs the political scene is far from clear.

No doubt all concerned would hope to leave a legacy of stability and pragmatic collaboration between the army and “progressive forces” for the sake of national cohesion, knowing that the country still has much “catching up” to do. Continued emphasis on increased transparency in policies and politics would assist Myanmar achieve this goal.

However, on the question of a possible reconciliation between Myanmar’s Buddhists and Myanmar’s Muslims, especially the Rohingya, there are less grounds for optimism, and here it may be international expectations that are rather unrealistic. Conflict has existed in Myanmar over Muslim migration from Bangladesh dating back to historical times, and many Rohingya were never granted Myanmar citizenship, although considerable numbers were.

Previous Myanmar governments deferred any resolution of this problem, on which it proved impossible to achieve a reasonable national consensus. Under military rule, successive regimes resorted to an interim ‘solution’ based on segregation of the two communities.

It is unclear whether the incoming NLD government can easily reverse previous arrangements under which a measure of co-existence had been possible; yet the current ad hoc situation is probably unsustainable. Nor is it clear whether finding such a solution to the Rohingya problem is a high priority for the NLD.

On the general matter of achieving lasting peace and appropriate socio-economic development, it is hard to be optimistic, given the sorry history of highly centralised modern Burma, and the struggle to secure the ‘nationwide’ cease-fire agreement pushed so determinedly under the Thein Sein government. Political reconciliation is inevitably closely connected to the issue of federalism, or decentralisation and proper recognition of regional aspirations.

On these key questions, both the Thein Sein government and the army shied away from firm decisions, alarmed by the unexpected outbreak of communal violence in 2012. And even Aung San Suu Kyi and the NLD seem uncertain about taking any bold or risky decision on substantive decentralisation of power and authority, let alone a practical “federal” system of government. A symbolic step – such as the convening of a new Panglong Conference as is being proposed by Aung San Suu Kyi – might help, but it is by no means clear that worthwhile concrete solutions would emerge, given the long legacy of distrust and suspicion that persists. Sensing this, regional communities seem doubtful that an NLD government would really allow Bamar/Burman interests to be subsumed by ethic interests in regional areas.

One other key question is how Myanmar’s new government will get on in the international realm. On foreign policy, generally, it could be argued that bi-partisanship has dominated Myanmar’s international relations with the important exception of sanctions, which Myanmar’s military dominated regimes opposed but the NLD broadly supported. The lifting of most sanctions after Myanmar’s April 2012 by-elections, meant that this point of differentiation between the major parties has disappeared. Myanmar’s broadly ‘non-aligned’ foreign policy is now supported by all concerned, as is Myanmar’s active participation in ASEAN, and its pursuit of constructive relations simultaneously with China, the United States, and India. Recent years have seen both major parties devote some priority to the smooth conduct of Myanmar’s relations with the major powers in its sphere – China, the United States, and India.

A new NLD government will not bring any particular advantages – or disadvantages – in foreign policy, despite the superficial impression that the NLD enjoyed superior relations with Washington and its allies. If anything, China will be inherently suspicious of an NLD government, even when those suspicions are not really justified or soundly based on substantive problems.

Considering all of the above it is no surprise that one firm specialising in country risk assessment, BMI (Business Monitor International) Research, recently published its updated “Risk Reward Index” assessment after the new Myanmar government took office in March 2016, ranking Myanmar 38.9 out of 100, up from its previous raking of 34 out of 1000. This might seem like a harsh assessment, but it is probably about where Myanmar should be ranked, given that most regional countries have been exposed to investor expectations for a much longer time than Myanmar. The key then might be to ensure the new Myanmar government takes such assessments seriously.

Overall, a key task for the new Myanmar government will be to generate wider confidence in its ability to govern well. This will involve demonstrating to the widest possible audience its capacity to run the country reasonably effectively, with no major confrontations or disruptions, minimising petty internal differences and conflicts, and avoiding serious mistakes or mishaps.

These are no small challenges for a new and relatively inexperienced government. As Foreign Minister, Aung San Suu Kyi can play a vital role in sustaining international confidence in Myanmar. However, the international media, international credit agencies, international financial institutions, foreign investors and international donors could be rather unforgiving if they decide that Myanmar has squandered its chances and lost the ‘trust’ of the international community. This may be why, in Myanmar, appeals to national unity and national cohesion are not only important, they are real. This is also why the international community needs to listen to those who know Myanmar well, and not just those who perceive Myanmar primarily through their own agenda.

This article is a collaboration between Policy Forum and New Mandala, the premier website for analysis on Southeast Asia’s politics and society.