Roundtable on 'China 2025: Regime transition in China?' with Jonathan Fenby and Minxin Pei

Roundtable on 'China 2025: Regime transition in China?' with Jonathan Fenby and Minxin Pei spotlight image

Roundtable on 'China 2025: Regime transition in China?' with Jonathan Fenby and Minxin Pei

22 October 2013

Esperanzas y obstáculos en Myanmar

Esperanzas y obstáculos en Myanmar

Esperanzas y obstáculos en Myanmar

01 August 2013
From ESglobal

External Author(s)
Katinka Barysch

Challenges of a multipolar world: The United States, India, and the European Union in the Asia-Pacific

Challenges of a multipolar world

Challenges of a multipolar world: The United States, India, and the European Union in the Asia-Pacific

External Author(s)
Rohan Mukherjee

Written by Rohan Mukherjee, Clara Marina O'Donnell, The German Marshall Fund of the US, 11 July 2013

Hope and trials in Myanmar

Hope and trials in Myanmar

Hope and trials in Myanmar

Written by Katinka Barysch, 26 July 2013

Myanmar has a long and difficult road ahead to achieve political stability, democracy and economic development. Hope rests on Aung San Suu Kyi to pull the nation together and lead the reforms after the 2015 election. Are Myanmar’s, and the world’s, expectations too high?

I went to Myanmar recently as part of the ‘young global leaders’ club organised by the World Economic Forum. I saw a country changing fast, full of anticipation but with an uncertain destiny. Yangon, the country’s old capital and commercial hub, illustrates Myanmar’s economic challenges, while Naypyidaw, the eerie new administrative capital, shows its political challenges.

Ramshackle Yangon (formerly Rangoon) almost comes as a shock, so used are we to ultra-modern and gleaming Asian cities. There are no multi-storey department stores, branded coffee shops or air-conditioned office towers. It feels weird to walk through crowded alleys where not a single person is on a mobile phone. Even though the price of a SIM card has come down from $1,000 a couple of years ago to around $60 today, mobile phone penetration in Myanmar is still only 4 per cent (in Thailand: 117 per cent). Internet penetration is even lower.

Myanmar is one of the world’s poorest countries. A quarter of the people live on less than $1.25 a day (though all statistics in Myanmar should be treated with great caution). The McKinsey Global Institute has calculated that even under a best-case scenario in which annual GDP growth doubles, GDP per head (on a PPP basis) would reach only $5,000 in 2030 – roughly where Morocco and Mongolia are today. While other ASEAN economies are thriving on the production of cars, electronics and consumer goods, almost half of Myanmar’s output comes from agriculture. The biggest export items are jade, logs and natural gas.

Training a skilled workforce will take decades: children stay in school for only four years on average, while the higher education system – 164 universities overseen by 13 ministries – is designed to prevent student revolts rather than produce good doctors and engineers. Frequent power-cuts make manufacturing difficult. Logistics are a struggle in the absence of modern road and rail networks. And only North Korea has a less developed banking sector.

But Myanmar offers plenty of opportunities, too. Labour is cheaper than in other Asian countries so Myanmar will attract the garment trade and other low value-added industries. McKinsey thinks that Myanmar could ‘leapfrog’ several stages of development by using digital technology to upgrade education, health-care and finance. Its strategic location between China, India and South East Asia could be attractive to investors. And the country has plenty of natural resources, including vast swathes of fertile land.

The West has lifted almost all economic sanctions. So far, however, potential foreign investors remain cautious: foreign direct investment was a paltry $1.4 billion in the year to April 2013 – though this was a fivefold increase on the previous year, when sanctions were still in force. If economic reforms reached a critical mass, that sum could quickly multiply.

That is a big ‘if’. A visit to Naypyidaw, in the centre of the country, suggests that the political system may not yet be able to sustain ambitious economic reforms. Naypyidaw is military dictatorship set in concrete: a vast expanse of emptiness (the city is seven times the size of Singapore), dotted with enormous official buildings (the parliament is bigger than the Pentagon) and connected by eight-lane highways (24 lanes in front of the presidential palace). These are completely empty – devoid of cars, mopeds or people. Although the government has forced civil servants to relocate and claims (implausibly) a population of 1 million, this place resembles a ghost town.

Other than official palaces and pastel-coloured condominiums for civil servants, Naypyidaw offers little else: a big new airport with few staff and even fewer passengers, a conference centre donated by China, a couple of American-style hypermarkets surrounded by deserted parking lots, a replica of Yangon’s golden Shwedagon pagoda and a zoo with penguins. The city also has a surprisingly large number of hotels, with lots more being built – presumably in preparation for the South East Asian games that Myanmar is hosting later this year and its forthcoming ASEAN chairmanship. But who will stay in them once these events are over?

Some say that the astrologer of Than Shwe, the former military dictator, told him to build the new capital in the middle of nowhere; others that the junta simply wanted an inland capital to avoid an American invasion or bombing (in Naypyidaw the ministerial buildings are several miles apart). Construction began in 2001, in secret. Five years later, the Burmese learnt about the new capital when it appeared on daily weather reports. Naypyidaw makes sure that Myanmar’s people are far removed from their rulers.

The big hope now is that the reform ambitions of President Thein Sein have more substance than the city in which he reigns. Over the last three years, the speed of Myanmar’s democratic opening has been breath-taking: Aung San Suu Kyi has been released from house arrest and her National League for Democracy (NLD) allowed to run in last year’s by-elections; most political prisoners have been set free; press censorship has been lifted; and the blacklist of foreigners and dissidents barred from entering the country has been cut drastically.

However, Myanmar still lacks many of the necessary ingredients for a successful reform programme: policy is made in a haphazard fashion and there is no medium-term roadmap; state administration is weak since civil servants have traditionally been appointed for their loyalty rather than their skills; and levels of corruption are on par with Afghanistan and Sudan.

Investors will stay wary as long as the outcome of the reform process remains uncertain. The army and its cronies, who used to benefit handsomely from Myanmar’s monopolistic and over-regulated economic system, appear resigned to the reforms, but may start pushing back. Perhaps the biggest risks stem from the country’s long-standing ethnic and religious conflicts. Around 60 per cent of the population are Buddhist Burman (or Bamar) people, while the rest are from various ethnic and religious minorities fighting for equality and economic opportunity. The government has now concluded ceasefires with all the armed groups, most recently in May with the Kachin Independence Army in the far north of the country. These conflicts were the cause of and justification for military rule over 60 years. Myanmar will not achieve liberal democracy unless it deals with them in a sustainable way.

The International Crisis Group warns that the ceasefires will fail without first, a political settlement in the shape of a constitution that gives significant autonomy and rights to the minorities; second, a workable plan for integrating the often war-ravaged minority areas (home to 70 per cent of the country’s natural resources) into Myanmar’s economy; and third, an effort to root out the cronyism and crime on which many of the country’s military have flourished.

Then there is the separate issue of the Rohingyas – an oppressed Muslim minority whose origins and right to be in Burma are disputed, unlike those of other ethnic groups. The growing tensions surrounding the Rohingyas have fostered some nasty Buddhist nationalism and violence against Muslims in Myanmar. 

Although some journalists and NGOs are speaking out about the need for a comprehensive settlement of the minorities problem, most people react with palpable unease when asked about it. Aung San Suu Kyi hesitated before condemning the violence against the Rohingyas, and when she did, she remained vague and cautious. Her reticence has upset some of her supporters in the West. One person who knows her well says that she is the only person who can unify her nation but that she needs to pick her fights carefully: if she pushes too hard on the minority issue now, her chances of becoming president in 2015 might diminish. Another of Aung San Suu Kyi’s contacts welcomes her transition from “icon to politician”, predicting that as president she would be more courageous on the ethnic minority conflicts than the present government.

At the World Economic Forum in Naypyidaw in early June, Aung San Suu Kyi declared that she would like to run for president in 2015. But this cannot happen unless the government changes the constitution, which prohibits people with foreign spouses and children from running for the office. Aung San Suu Kyi is the widow of the British academic Michael Aris, and her two children have British citizenship. If she is allowed to run and wins, she is almost bound to disappoint, given how enormous Myanmar’s challenges are. “There is perhaps too much hope”, she said in a briefing recently.

Given Aung San Suu Kyi’s iconic image and the sincerity with which Thein Sein seems to be pursuing reform, the West stands ready to help Myanmar with money, advice and trade. The EU has responded sensibly to Myanmar’s opening. It has lifted sanctions in a two-stage process, reinstating the so-called GSP preferences (free market access to goods from poor countries) and widening its aid effort beyond humanitarian programmes. The EU’s priorities – peace, democracy and development – seem right, and probably in that order too. The challenge now is to find ways of turning ambition into reality, including through co-ordination with the US on the one hand and China on the other.

Myanmar is so backward that even ‘capacity building’ – strengthening local administrations and the infrastructure needed to absorb aid programmes – will be difficult. At the same time, there is so much international goodwill that a surge of aid seems inevitable.  Among several things that can be done, the EU should help to channel aid towards capacity building. Despite all the difficulties and inevitable disappointments, this is a time and a place where anything is possible.

Katinka Barysch was until recently deputy director of the Centre for European Reform

China & Asia

Experts: 

Out of range, out of mind: Is there a role for Europe in the Korean crisis?

Out of range, out of mind: Is there a role for Europe in the Korean crisis?

Out of range, out of mind: Is there a role for Europe in the Korean crisis?

Written by Ian Bond, 12 April 2013

From London or Brussels, the situation on the Korean Peninsula can appear – in the words of former British Prime Minister Neville Chamberlain – a "quarrel in a far-away country between people of whom we know nothing". On one side, a mad dictator (you only have to look at his hairstyle) with nuclear weapons and long-range missiles of doubtful reliability; on the other side, the country of Gangnam Style and Samsung. The nuclear weapons cannot reach Europe. And the big global powers, the US and China, are already engaged. Europe could leave them to sort things out, at best playing the role of Greek chorus in support of US policy (as a Western ex-official described it recently).

But that would be a mistake. Seasoned Korea watchers say that the current crisis is as serious as they can recall. Against that background, as the US flies B2 bombers over South Korea and Japan deploys ships with anti-missile defences, one could ask, as Stalin did of the Pope, how many divisions the EU has. But while it may not have armies there, Europe has interests and assets in the region. It should think about how to protect the former and use the latter.

Any conflict would have a significant global economic impact. The Republic of Korea is the world's 15th largest economy and Europe's 9th largest trading partner. And if North Korea started lobbing missiles at Japan (the EU’s 7th largest trading partner), or if China, the EU's second largest trading partner, became directly involved in the fighting – admittedly, highly unlikely – that would multiply the effects on Europe’s own economic well-being.

Europeans also have an interest in the global order which the Democratic People's Republic of Korea (DPRK) threatens: the nuclear non-proliferation regime; norms on refraining from the threat or use of force in international relations; and respect for UN Security Council resolutions. The failure of global powers and institutions to stop North Korea becoming a de facto nuclear weapons state is already a bad precedent.

Finally, the crisis could have repercussions for transatlantic relations. Though there are American officials who think that greater European involvement in Asia would just complicate matters, there have also been calls from parts of the administration, including then-Defense Secretary Leon Panetta in January 2013, for increased European engagement there. If Europeans ignore these calls entirely, they risk strengthening the perception within Washington that the value of the transatlantic alliance is dwindling.

What more can Europe do? There are clear constraints; a diplomatic initiative cutting across the longstanding Six Party Talks process, for example, or any move to soften sanctions on North Korea without significant movement from Pyongyang, would be very unhelpful. But in the short term Europe can work for de-escalation. We do not know exactly what Pyongyang wants, but we can assume that the North Korean authorities are looking for concessions from the international community: aid, or a peace treaty with the US, for example. They need to hear a consistent message that this is the wrong way to set about things. The Europeans should signal strongly to Pyongyang that its aggressive stance will get it nowhere. Statements this week by Baroness Ashton, the EU High Representative, who called on North Korea to re-engage constructively with the international community, and by Anders Fogh Rasmussen, the NATO secretary general, whose message was "Stop what you are saying, stop what you are doing", are a good start. The EU has already imposed wide-ranging sanctions on North Korea following its December 2012 ballistic missile launch and its February 2013 nuclear test. It should tell Pyongyang clearly that while it would rather reward genuine efforts to reduce tension, it will not hesitate (for example) to restrict the country’s access to foreign currency in response to further provocative acts. 

Europeans should also intensify contacts with China and Russia – which cannot be suspected by North Korea of speaking on behalf of the US – and urge them to keep up their recent efforts to discourage North Korea's aggressive posturing. President Xi Jinping’s remarks at the Boao Forum this month, in which he said "no one should be allowed to throw a region and even the whole world into chaos for selfish gains", were evidently aimed at North Korea. China also seems to be making quiet moves to tighten implementation of the UN Security Council's financial and trade sanctions against North Korea. The EU should let the Chinese know that it welcomes such steps. 

If this becomes a shooting war, Europe's practical role in Korea will be limited (though European forces may be called on to stand in for US forces in areas closer to home, and some allies may have niche capabilities to offer). But if, as most experts believe, the situation eventually calms down, in the longer term Europeans can help North Korea and the concerned powers to move forward by taking the initiative in four areas.


First, the EU should reinstate its formal political dialogue with the DPRK, postponed last November as tension around North Korea’s weapons programmes grew. The Union should also encourage the European Parliament to keep channels of communication open. The Parliament wants to maintain a firm line with North Korea but it has in the past had contacts with the DPRK's Supreme People's Assembly. Even if EU officials and MEPs are unlikely to get close to any of the real decision-makers in North Korea, such contacts would expose North Korean officials to European thinking and perhaps challenge their preconceptions about Western aims.

Second, the EU should support 'track-two' dialogues. Think-tanks and academic institutions in several European countries have acted as venues for discreet discussions between North Korean and Western experts and former officials. If the North wants to improve relations – an important caveat – then such fora could allow it to explore new approaches without commitment and without having to take public positions. A degree of official backing from European governments or the EU itself could help to convince the North Koreans that Europeans are also serious about helping to reduce regional tension and improve relations.

Third, the EU could strengthen people-to-people and cultural co-operation. The North Korean authorities do not make this easy, as the 2009 closure of the Goethe Institute reading room in Pyongyang showed. But there have been some successes, such as the visit of the Munich Chamber Orchestra in 2012 and the showing of 'Bend it like Beckham' on state television in 2010; and the British Council has a long-running programme of teaching English teachers in North Korea, using a UK-focused curriculum. Without exaggerating their impact, such connections could help to expose some North Koreans to the reality of life outside, and implicitly encourage them to draw a contrast with official propaganda about the West.

Finally, Europeans should support economic and business training. In the long run, nothing in North Korea can improve much without a radical change of economic course. Where is the DPRK going to find the people to lead and manage such a process? Inevitably, China will have the greatest part to play, given its proximity and its own history of economic transformation. But Europeans – and especially, perhaps, those from the former communist countries – should  offer their insights and expertise. According to Professor Susan Shirk of the University of California at San Diego, and a former senior State Department official, such low-key, non-political capacity building could strengthen the voices of economic rationality within the country.

What tools does Europe have? Europeans have political ties with all the players in the region. The EU has had a 'strategic partnership' with South Korea since 2010, and there are regular high-level contacts between Brussels and Seoul. The High Representative discussed the situation in the region with South Korean foreign minister Yun Byung-Se on April 8th. The EU has a wide-ranging political dialogue with Japan, from summit level downwards. 

The Union also has a formal high-level dialogue with China on strategic and foreign policy issues. China is probably the only country with any significant degree of influence over North Korea. Beijing has hitherto prioritised stability in North Korea over everything else, worried by what might happen on the border if internal change led to disorder. The EU has stepped up its contacts with Beijing on North Korea, expressing appreciation for the recent steps the Chinese have taken (for example in co-sponsoring the latest package of UN Security Council sanctions after North Korea's third nuclear test in February) and encouraging them to be firm with North Korea.

While the US, Japan and South Korea have no diplomatic relations with the DPRK, seven EU member-states – Bulgaria, the Czech Republic, Germany, Poland, Romania, Sweden and the UK, though not the EEAS – have embassies in Pyongyang, which provide a source of first-hand information and a channel for communication. The Swedish Embassy also represents US diplomatic interests in Pyongyang. There are occasional bilateral visits to Pyongyang from Europe, for example by a Dutch agricultural trade mission in 2012. The EU has a small programme of humanitarian assistance, focused on vulnerable groups in North Korea. Europeans have a history of quietly facilitating dialogue between North Korea and the outside world, including through business education.

The Korean Peninsula is far away, but we should not make the mistake of equating distance with lack of importance to Europe. Good or bad, what happens there will affect us. Even if their clout is relatively limited, Europeans should think creatively about how to nudge developments in the right direction.

Ian Bond is director of foreign policy at the Centre for European Reform.

Ian Bond

Ian Bond

Ian Bond

Director of foreign policy

Biography

Job title: 
Director of foreign policy
Profile image: 
Ian Bond

Ian Bond joined the Centre for European Reform as Director of foreign policy in April 2013. Prior to that, he was a member of the British diplomatic service for 28 years.

Extras
Areas of expertise: 

Russia and the former Soviet Union, European foreign policy, Europe/Asia relations, US foreign policy

Areas of expertise

Russia and the former Soviet Union, European foreign policy, Europe/Asia relations, US foreign policy

Languages spoken

English, French, Latvian, Russian

The EU, Russia and China

The EU, Russia and China

The EU, Russia and China

Written by Charles Grant, 15 March 2013

Roundtable on 'Britain, the EU and China: An agenda for growth'

Roundtable on 'Britain, the EU and China: An agenda for growth'

Roundtable on 'Britain, the EU and China: An agenda for growth'

16 April 2013, 3:00 pm - 5:00 pm

With Liam Byrne, Rana Mitter and Linda Yueh

Location info

London
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