30 January 2015
A lock on the Three Gorges Dam in China (Britrob/Flickr).
Developing Myanmar’s anemic infrastructure is a key strategic priority for China – and although Naypyidaw wants to encourage investment from elsewhere, the converse remains true.
The 1990s and early 2000s were a precarious time for the military junta then in control of Myanmar. Internationally isolated by financial sanctions, the generals were courted by few foreign investors aside from their giant neighbour to the north.
Dozens of secretive infrastructure deals were signed with Beijing, leading to an overdependence that many believe has been a principal catalyst of political reforms since 2011.
With its plentiful rivers, vast offshore natural gas reserves and location nestled between Yunnan Province and the Indian Ocean, Myanmar is viewed in Beijing as being of particular strategic importance, particularly in hydropower development, oil and gas, and transport connectivity.
Over the past few years, big state-backed Chinese investors have had to start jostling for contracts with new entrants from Japan, Korea and the West. But the big-ticket deals with China – signed by the former junta in total secrecy in the 1990s and 2000s – must still be honoured.
For a government desperately trying to become legitimate in the eyes of its own people, this is a problem. Few political issues in contemporary Myanmar incense passions quite like the spectre of Chinese investment.
The proposed Myitsone dam, to be built in Kachin State at the confluence of two rivers that merge to form the mighty Irrawaddy, has been a particular source of acrimony. A joint venture between state-owned China Power Investment Corporation (CPI) and the Myanmar government, it would be the largest hydropower development in the country – but 90 per cent of its production would be sent directly to the Chinese grid for the first 50 years.
Ostensibly bowing to popular pressure over its environmental impact, the project’s lack of clear benefit for Myanmar’s citizens and the dark symbolism of damming Myanmar’s most sacred river at its source, President Thein Sein in September 2011 ordered a postponement of construction until 2015, although a new date has yet to be announced.
Perhaps the biggest threat to the Myitsone project going ahead is the resurgence of armed conflict in Kachin State since 2012, when the military unilaterally attacked the Kachin Independence Organisation (KIO), breaking a 17-year ceasefire.
The conflict in northern Burma is part of a complex web of insurgency that also encompasses the route of twin pipelines built by state-owned China National Petroleum Corporation (CNPC), which carry natural gas from the Bay of Bengal and crude oil from western Asia to China’s relatively underdeveloped west.
A proposed high-speed rail link from Yunnan to a Chinese-backed special economic zone at the mouth of the pipelines was shelved last August, ostensibly due to bureaucratic technicalities over a memorandum of understanding between Naypyidaw and Beijing.
Many people have a pervasive belief that intensified fighting in areas of interest to China is an attempt to militarily pacify ethnic armed groups, trampling on ethnic minorities’ human rights.
“When we really closely look at the locations [of fighting], they are also the places where the contracts have been signed, especially from China,” said Khon Ja, liaison officer for the Kachin Peace Network, a consortium of ethnic Kachin civil society groups. “This means we need to look at how this is linked to the military, and what is the benefit for the military,” she said.
In 2013, the government announced plans for six new dams along the southern Salween River, with most of their output earmarked for Thai consumption. In particular, the Hatgyi dam – a joint-venture between the Myanmar government, the Electricity Generating Authority of Thailand (EGAT) and China’s state-owned Sinohydro Corporation – has been blamed for catalysing the breakdown of a two-year ceasefire in the area with two ethnic Karen armed groups.
The local company that will build the dam, IGE Ltd., is registered in the name of one of the sons of Aung Thaung, a notorious hardline legislator and former army lieutenant-colonel added to the list of those targeted by US sanctions last year for “actively attempting to undermine recent economic and political reforms in Burma.”
While China must jostle for space with infrastructure financiers from further afield, decades of guanxi – personal connections – cultivated between military leaders and Chinese state-owned enterprises means that Beijing is almost certain to remain Myanmar’s single-largest source of infrastructure financing for the foreseeable future.
“[Western investors] want to know exactly what they’re bidding on. Whereas if you go with the Chinese, they just make an offer,” said one Western consultant working on infrastructure development in Myanmar. “They’ll just do it.”